Don’t Be a Loser

Competition and comparison are the most detrimental when they become the focal point of your personal goals. When you’re trying to change something big, something really important in your life, there’s no need for winners and losers. When this is our mindset, too often we end up the losers. Focus on progress, making small improvements overtime, and you’ll always see the results of your efforts.

Read this wonderful article - 

Does Winning Matter?

Disruptive Product Innovation – Below the ‘CUT LINE’ for Giants

Disruptive innovation is a buzzword these days. Entrepreneurial ventures always remained ahead in coming up with new innovative products. Big giants were always tried to innovate but failed mostly in really disrupting the markets. These companies did really well on sustaining innovation front. There is lot of material and management advice available to transform these bureaucratic giants into innovation power. I am pessimistic about this approach. Everybody should do what they are really good it. There are structural problems that will stop big companies to be innovators of next generation products. Instead of trying in house innovation, big companies should look outside for good acquisitions.  Google is a great example for company, which failed miserably in creating great in house products – Google+, Google Buzz, Wave, Google videos… on the other hand Google did great in acquiring great product companies – youtube, doubleclick, Android, quickoffice and many more.

To understand the process of innovation, I have come up with interesting yet natural analogy. How does living creatures improve their species? Answer to this question explains why, where and how innovation can thrive. Living creatures acquire or generate new skills among new generations by evolution. We can take examples of humans to understand the process of generating new ideas. When two individual with different sex get attracted towards each other and decide to get intimate, we see starting of new life. New life is the result of free and natural process i.e. Sex. Chromosomes decide most things in people’s life and there is no way, we can change the genetics of a person once life is created. Now once baby is born, baby learns many things at a rapid pace. Walking, speaking, acquiring new languages, understanding emotions, listening etc. are learned by a child in a very fast pace because baby is allowed to make mistakes. Baby is allowed to fall as many times as possible and then try again. On the other hand parents of baby are selflessly doing everything to help the baby to learn things. They don’t see a fall as weakness but every small step taken by baby is a celebration for them. This is the process that brings the most amazing skills, intelligence and courage to the society that we all celebrate in the form of Nobel Prize, Entrepreneurship, World Cups, Olympics and great Leaders (Like Gandhi).

Lets observe this process of creating diversity and better species closely. We can see four core principles applied to the process-

1.    Mating of diverse Ideas

Take any startup with 2 or more founders, you will find that people who founded the company were very different persons. We sometimes take diversity in very narrow terms. We see people’s background and education to define diversity. More than background and other things, personalities of founders matter the most. People, who have very different perspective to a problem, start startups together. They enjoy trust of each other. Diversity and trust helps the startups to see the future and solve problems, which are ignored by others. This is the most crucial that decides the DNA of new project or Idea.

2.    Wait for Ideas to mature

Just like pregnancy, a startup idea takes time to mature. People spend years to think and plan about starting the venture. Many a times, ideas are initially very abstract and they need time to mature. Sometimes external environment is not ready to accept news ideas. Think about iPhone in 1990’s, iPhone would have been a dumb machine as there no high connectivity networks.  That’s why founders wait patiently for right time to start a new venture. There are no shortcuts here. Entrepreneurs wait for right opportunity to work on new product ideas.   

3.    Nurturing and freedom to fail

I have seen no parent who scolds a child when child falls while trying to walk. Parents just shower praise and encouragement. Same we see in startups. Founders are focused on creating wonderful products and even if team fails, team gets nothing but encouragement of internal stakeholders as well as external stakeholders. Team shows very strong desire for trying new things and creating a useful product to customers. This is the essential part of process to create awesome product. Nobody can run when chaianed.

4.    Agility and Speed

Startups are known for agility and speed. Speed is not artificially created but it comes from the team’s motivation to try new things. Team (just like a kid) is always ready to do new things, accept change and listen to market and users. Speed is not just execution of project from learning from past mistakes and avoiding them in future. Teams work so closely in startups that title become obsolete and functional expertize goes out of window. In such environment everybody owns the product and hence the blame.

Now if we look for these core values in any big organization, we can see some of them in parts and isolation. In most of the big organization we will find anti core values for above values. Lets look at how these anti values are hurdle to innovation-

Core Values for Disruptive Innovation	Anti Core values that we find in Big gaints
Mating of diverse Ideas	Teams work in Silos, Management believes in standardize processes
Wait for Ideas to mature	Do it now or it will never be done
Nurturing and freedom to fail	Meet the Goals or get the worst rating
Agility and Speed	Do something only if you are sure

1.    Mating of diverse Ideas -->Teams work in Silos, Management believes in standardize processes

Every organization strives for standardization of process. Teams become too big and process is the only savior. Once things get standardized, new ideas have very less scope of getting noticed. Teams are focused on their own goals and hardly anybody gives preference to other teams’ priorities.  Teams always interact as adversaries and not as friends. Managements see things but takes step that further worsens the problem. Why? Because management brings new processes to kill the old processes and these steps are seen as bureaucratic and burdensome.

2.    Wait for Ideas to mature --> Do it now or it will never be done

Wait a minute? You said that we should wait for right time. In a big organization, right time is the time when idea strikes and management is convinced about the idea. People can see the ideas’ future and predict the failure of new products but they won’t speak. Promotions and rewards flow for executing the ideas and shipping the products. If you wait for right time, your colleague may convince management about the idea and run away with promotion and rewards.

3.    Nurturing and freedom to fail -->Meet the Goals or get the worst rating

All big organizations are driven by quarter and year-end goals. Shareholders pass the burden of meeting goals to higher management. Higher management adds some more buffers and passes the goal to mid management. Mid management adds some more buffer and passes the goals to lower rank employees. Now all those who will meet their goals, will be rewarded and rest will be punished. Tell me where is the opportunity to fail??

4.    Agility and Speed --> Don’t waste resources… Do something only if you are sure

Agility and speed requires flexibility to change decisions every day. This means that we have to go back on what we said as early as yesterday.  We all get resources from management after convincing them about viability of a project. If an employee shows that he/she may be wrong sometimes, management will tag him/her as unreliable or a person with low confidence. He/she may not be given adequate resources in future as he/she is seen as person who wastes resources.  All this stops employees from trying new things and asking resources from them.  They genuinely go for ROI analysis and most of the times, new products don’t have clear revenue models. Think about WhatsApp. Can Whatsapp’s business model will pass through any management’s screening ? Too much focus on ROI leaves us option with low ROI yet safe options.

We can clearly see from above analysis that Big companies inherently develop cultures and processes that throws innovation below the ‘CUT Line’ where as innovation should always be above cut line for all companies which want to survive in this highly competitive business environment.  Big companies should focus on what they are good at and be open for acquiring new product companies as soon as opportunity strikes.  We can call it – “Acquisition driven Disruptive innovation”. This should be always above the ‘CUT Line’ for a company that wants to survive.

Part 2 : AAP vs BJP+CONG is actually Michael Porter vs Clayton Christensen

In last post, I explained why AAP shouldn't exist as per Michael Porter's model. Reality is that AAP exists and it exists as an exponentially growing political force. So, how did AAP manage to do it? AAP used simple strategy that is called 'disruptive strategy' of Clayton Christensen.  AAP did following things which led to disruption of the Indian Political System (Market). These steps taken by AAP clearly defines what a new company should do to break into bad industry (as per Michael Porter's strategic model).

1. Give Inferior yet Sufficient Product
Arvind and other AAP leaders brought forward  the idea of 'Lokpal', a cure for corruption. It was clear that this solution can't replace bad governance or stop bad governance. This solution was aimed at reducing the pains of citizens. Team offered a pointed & single solution for people's most of the pains. Good governance is something that citizens look for but in absence of good governance, citizens accepted inferior yet sufficient product i.e. 'Lokpal'.

2. Create New Market
AAP knew from day one that it can't  target the full market, so AAP went for city based urban voters. Urban voters especially, youngsters don't take interest in politics. AAP targeted educated urban youth and made it fashionable to get involved in political discussions.  Once AAP was able to mobilize youth, other urban segments got attracted to AAP. AAP created a new market of voters i.e. urban youth.

Above two strategic moves & perfect implementation of these  created a challenge for old political parties in India. Why can these political parties not respond to AAP? Reasons for failure of BJP and Cong to contain AAP are following-


1. Incumbents can't Respond due to Connected Parts
Incumbents can't respond directly to AAP as incumbents (BJP & Cong) have more connected parts. These different parts across the nation are same for citizens.   For example, AAP promised to reduce power tariff in Delhi. BJP & Cong can't do that blindly as they are ruling other states too and similar demands will start coming for other states. 

Another example is that AAP can decide not to field any candidate with criminal background. BJP and Cong is full of criminals and even if party leadership decides to get rid of these criminals, these parties will fail in many states and state governments will fall. So even if these parties may wish to get rid of these criminals, they can't.

2. Incumbents can't Spin off new Organization
Incumbents have cultural problems and even if they want, they can't respond to AAP due to connected parts.  To get rid of this limitation, they must spin off new organization to take on AAP. These old organizations can't do that as they will have to loose a lot of political space to new outfit. In politics, it will be impossible to control the new outfit and hence launching new outfit, is impossible for incumbents.

3. Incumbents can't Block Resources of AAP
Incumbents natural reaction to the AAP's growing popularity would have been to block resources of AAP. They failed to do so due to Crowd funding of AAP and Higher outreach of Internet & Social media.  AAP is not financed by a big corporate house and hence neither Government pressure nor  pressure of goons can cut supply of funds to AAP. Internet and social media made sure that AAP's ideas reach to masses instantly and freely. Putting media houses at notice also didn't work due to internet and social media.

Over all, its an unequal fight. On one side, there  is AAP, a new idea with no baggage and on other side there are incumbents with old ideas and historical baggages. AAP can't loose the battle if it doesn't wish to do so.

Part 1 : AAP vs BJP+CONG is actually Michael Porter vs Clayton Christensen

I do not prefer to mix business with politics or politics with business although both are mixed with each other everywhere in the world. Sometimes even it’s hard to understand whether politics is mixed in business or business is mixed with politics. Politics is a bad word for all who believe in doing business – honestly, inventively and progressively. In fact it was a bad word before ‘AAM AADMI PARTY’ (AAP) came into existence.  Anyway if you are not supporter of AAP still it makes a lot of sense to read this article as I am not a member of AAP either.

Why I call fight between AAP and CONG+BJP a fight between porter and Clayton’s theories because as per porter AAP shouldn't  exist today. To understand this in a better way, let’s understand porter’s theory first. Chart given below summarizes Porter’s theory -

All curious souls can read about Porter’s theory here.

Porter’s theory is interesting and it defines quality of an industry for profits. If above model is applied to Indian political context, we can map different stakeholders as following – (Here public welfare is real profit for a political system)

1 .Rivalry among the Players – Political dons

   Abraham Lincoln apply described democracy – “It is for us, the living, rather to be dedicated here to the unfinished work which they have, thus far, so nobly carried on. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion – that we here highly resolve that these dead shall not have died in vain; that this nation shall have a new birth of freedom; and that this government of the people, by the people, for the people, shall not perish from the earth.”

Democracy heavily relies on rivalry among the political parties. Implicit assumption in democracy is that political parties will fight so much that they will expose misdeeds of each other in such a way that there won’t be any evil left in any political party. Thinkers of democracy never thought that Indian political parties are going to undermine this basic principle. Political parties in India behaved as dons and hardened criminals to protect each other. They also behaved like cruel killers for any newcomer. No new party can survive without in principle accepting shoddy ways followed by other political parties. All political parties became cartels like drug dealers who protect nothing but the business of cheating and deceit.  They monopolized funding. They changed rules to protect each other. They killed anybody who challenged them.

Over all Indian political parties defined rivalry among them in a new way. They were best friends among themselves and worst enemy for any new comer or anybody who challenged their way of functioning.

2. Bargaining Power of Suppliers – Businesses & Elite Class

   Here suppliers of power and money were businesses and elite class and they were so much terrified by dons of power that they couldn’t muster courage to question political masters. All scholars fulfilled their duty by criticizing on surface and supporting these political parties from within. There are many examples when critics joined the same party which they were used to criticize. If there were some voices against political established, dons used their dirty tricks to silence them. 

  

3. Bargaining Power of Buyers – Poor, Illiterate public

   Buyers of this feudal democracy were 1.2 billion people. More than 60% people are actually very poor and actual literacy among people is definitely less than 50%. Government data points are different but if you decide to trust Indian government, you should better trust all conspiracy theories of the world. Public was not able to grasp the game played by political dons. Public became toys in the hands of BJP+Cong. Other parties were poor imitation of these parties. In realty public had no real choice and their choice was monopolized by political dons.

4. Threat of New Entrants – Who wants to die

   After above points, you can understand that there was no space for truly new force. CONG+BJP were ready to kill every new force that challenged them. These dons were so confident of their corrupting capabilities that they were used to challenge Arvind Kejrival to form new political party and fight election.  So threat of new entrants was almost absent.

5. Threat of substitute products – get labelled as naxalites

Come on, there is no substitute for democracy. If you will try anything new/creative, BJP+CONG will silence you by calling you naxalites, terrorists and guttersnipes etc. These parties made sure that no alternative force/system can come into existence.

As per Porter’s theory, there was no space for new force in Indian political system. All above discussion can be summarized in following picture –

As per above analysis there is no space for a new force and a new force can best survive for a niche segment. Then how come AAP won in Delhi? I will discuss in next post how AAP is a live example of Clayton’s  disruptive model and why they are going to win across the country?  

5 Strategy Lessons from Monopoly - The Game of Business

When I joined ISB (Indian School of Business), I had no idea about strategy in business. Strategy was a word that I used in the context of games or war. Once I was introduced formally to Porter's 5 forces model by Prof. Kale, I thought whether there is any easier way to teach and learn strategy. After ISB, I kept reading articles about different companies and business models and one day, one of my friend introduced me to this wonderful game of business - Monopoly- that really brought new insights in my understanding.

Monopoly is not a simple board game but great game of strategy, negotiations and partnerships. Out of numerous lessons that I learned from Monopoly, I am summarizing top 5 lessons  -

1. Invest Early - Reap Early & Later i.e. All the Time

In Monopoly, the easiest and most wise move is to invest early in the properties. Due to initial investment, Player gets advantage of taking rent from other players in the beginning of the game. Player can again reinvest this rent to create new properties and new revenue sources. Such move creates supply of constant revenue sources in long run. Other players get trapped from beginning and run out of cash. They can't build their properties and hence can't ask for higher rent. So, investing early matters a lot and first mover advantage can't be denied. Monopoly teaches first mover's advantage far more clearly than long HBR artciles.

2. Compete and Collaborate  Simultaneously 

In Monopoly, players have to make deals with each other. Its almost impossible to play the game without collaborating with other players to build houses and properties. All the players compete to create higher net worth for them but at the same time they collaborate to build houses. Players have to make strategic choices to create value in the economy but without making the competitors really very strong. If today, we put Google, Microsoft and Apple in this context, we will find that they are doing exactly the same. Microsoft is collaborating with Apple by providing an alternative to Google search engine. At the same Microsoft is competing with Apple in mobile and tablets market. Google is default search engine in iPad, iPhone and Safari but Google's Android is a threat to Apple.

3. Don't Kill Your Competition Entirely
In Monopoly, competitors are customers. If you kill your competitors, you actually loose a  source of revenue. So, it makes sense to weaken the players that they can't be a threat. At the same time keep them alive as killing them may make other players stronger or provide other players new strategic properties. In business too, when some industry is devoid of competition and remains lucrative to a handful of players, there is a huge disruption in store. Competition makes products better and prepare companies for innovation.  Lack of competition brings complacency in the organization. Employees do not feel challenged and hence the most creative employees leave.

Competition may be bad in short run but in long run, competition makes a company and its products better. There are numerous example to prove this point. When PC was taken by MS fully, mobiles and tablets disrupted the market. When Railways got complacent about its monopoly, Air travel threatened it. So, do not kill the competition straight away, allow them to die slowly :)

4. Take Care of Liquidity

Cash is king especially at the times of distress. A company may have a number of assets but company should not be cash strapped. A cash strapped company gives a feeling to customers and buyers that company may go bankrupt. They try to negotiate for cash further and its creates problems for the company. A company may have to sell its assets to pay to its suppliers if company is not maintaining a healthy cash flow. Same thing is taught by Monopoly. Everybody prefers to target a cash strapped player and a cash strapped may have to go for auctioning of property. Monopoly tells us that maintain cash as once bills will be raised by creditors, we can't run away. Always maintain a healthy cash asset on Balance Sheet.

5. Luck Matters

In Monopoly, a dumb player may get all strategic properties just by luck. Now even if this player shows least intelligence in the game, other players force him to enter in the deals. As all other players are competiting to crack a deal with this unique lucky player, they outbid each other to get the deal through. Lucky player easily gets the revenue sources as others plead him to cooperate. Ultimately a novice player can win a Monopoly game by luck i.e. Although its rare but possible that winner is decied by throw of die.

Same principles apply in real life situations. Sometimes a comapny enters into a industry just to diversify the portfolio and ultimately new products start bringing so much revenue that comapny have to abandon old products. Nokia is the greatest example of this. Recently Nokia started JV with Siemens and called Nokia Siemes networks (NSN). This JV was a small part of Nokia's mobile business. Nobody ever thought that Nokia will be taking NSN so seriously. Today, NSN is the profitable part of Nokia and Nokia has to sell its mobile business to Microsoft.

If you agree with my observations leave a comment and invite to play Monopoly with me :)

Microsoft, Apple and Google - Approaching wrongly to Internationalization & Localization

Take list of top most valuable brands in the world or talk about top most innovative companies; Apple, Google and Microsoft will be among top 10 companies of any list. Microsoft ruled the world in 1990s and Google rose in 2000s. Apple rose at the same time as Google but growth of Apple exceeded that of Google. Today these three great companies are competing and collaborating simultaneously. These companies are making strategic investments to beat each other. All this is boon to customers as it gives choice and value to customers.

But that's not the point that I want to put forward today. Visit iOS 7 launch page and see features are country dependent - http://www.apple.com/ios/feature-availability.

Why are these features country dependent? There are few chosen ones get all features, rest of the world gets these features later. It’s not the problem for Apple to solve. It’s the problem for all three companies that are approaching to internationalization & Localization. I believe that these companies should work towards creating a platform where local developers can publish their information to provide custom experience.  Think about a Siri or Google now where you speak: "top news" and Siri or Google now pulls news from TOI if you like TOI or from HT if you like HT. Same way when we search on “weather in Hyderabad”, we get weather from some weather websites. Can I choose providers of my choice? Can I get information from local providers such as Jagran.com? We can but Google has to go and tie up with every local providers. Humanly it’s not possible and that's why it makes sense to create a platform to develop localized experience.

Google search made world democratic, liberal and free. Due to Google's fair algorithm of search, many new businesses came into existence as cost of entry and discovery was reduced.  Windows did it as a computing platform. By launching App store on iOS, Apple made cost of entry really low for developers. So, what stops these great innovators to come up with a new platform for localization? I can think of three reasons for this closed approach:

1.  It’s not an easy problem to create open and flexible platform that supports all languages and cultures. 

2. Companies see more value in services than platforms and that's why everybody is focused on developing new services instead of creating a platform

3. World's business is shifting towards non-English markets but biggest pie still comes from English market especially from US. That's why non-English markets get ignored in large scale of things.

I believe it’s the time to think internationalization and localization in a new way and develop mobile and web platforms flexible enough for third party developers to integrate their services.