So I started this post with “disruption” and then veered off to “strategy”. What’s going on here, Uday? The reason is that the two share a tight relationship. I am reasonably convinced that disruption is a key ingredient of any and every strategy, and its relative weight in the equation is on the rise. In order to be at a place where you (i.e. the company) have never been before, you will need to displace or disturb something that is already there (i.e. the incumbent or competition). You may think that your product or service is unique, niche, never-thought-before, etc. but think harder because in every case, you will come up with some mechanism, widget, process, etc. that is already in place and is already satisfying the targeted “need”. However how you are different or trying to be different is probably by helping your target segment(s) derive or consume a better, faster, cheaper, or closer experience. What you are offering is an improvement over how the “need” was satisfied by other, existing firms. What you have just done is that you have disrupted an established norm by crashing into somebody’s party. That is the difference which is central to how I believe strategy is manifesting itself in current times.

When thinking of strategy, it is imperative to understand the current state of affairs. There are a number of tools that can help you understand the macro level dynamics of the market when formulating strategy – Porter 5 analysis, PEST analysis, VRIN analysis, Quadrant Crunching, etc. But you must dive deeper and get closer to the ground to understand what is it that is worthy of disruption in that specific context. Which feather can be ruffled, which rule can be bent, which idea can be twisted, which shortcut can be carved, which myth can be shattered, which 2 birds can be killed with 1 stone. OK, I will stop; you get the idea, hopefully. Thinking this way will give you everything that you need to formulate and articulate you specific firm’s or BU’s or product’s strategy statement. It will help you come up with the problem statement, because without that you are nothing but an imitator or emulator.

Everything that we have gotten to see lately and what we will see in the future will be a result of healthy, unconventional, transformational, creative disruption. I think we are at a point where we (i.e. the consumers) expect this disruption to happen around us at a steady clip and when it does not arrive in a timely manner, we start to get impatient. In the past we hated or resisted change but now we can hardly wait to change. We expect change! Name it – clothes, hairstyles, cars, accessories, music, food, appliances – we want to be presented with new things and new consumptions mechanisms all the time. We are expecting the Apples, Amazons, Googles, and Facebooks of the world to keep changing on us, keep breaking, twisting, turning, tweaking things that they have already built – so that we can be presented with new experiences.

Bottom line, your strategy must have a “disruptive” component else the odds of it being profitable are going to be slim to none. As always, feel free to disrupt my ideas.

To me the $1M question is what is the optimal place to start? Does it make sense to start by doing what I call “house-cleaning” – fixing the things that are broken, reorganizing functions/teams, removing things that do not work, improving existing processes, releasing once captive functions to 3^rd parties who can perform them more optimally, etc. OR do you say “Our organizational setup and processes are just fine; it’s just that the current set of widgets/services we offer are out of synch with what the market is looking for and hence we need to innovate towards better, faster, cheaper, and closer offerings.”

Are you with me so far? You see, at some level you need to make a choice – Do I improve or do I innovate? Let me try to paint a hypothetical picture for you that will hopefully give you a context to consider while you debate the learnings from this blog posting. Imagine you are the CIO of a multi-billion US firm. Your project delivery follows some vague, questionable methodology that requires people to produce artifacts that adds little value to the desired business outcomes. Your network connectivity is dead slow and your customers constantly complain about how long it takes to open/retrieve network assets. You do not have a clear way of measuring how your function is contributing to the top/bottom-line performance of your customers or organizations. Your internal customers are always mocking you for your ability to be agile and responsive to their needs. Although you are responsible for collecting the firm’s data and information, you are yet to propose any meaningful intelligence or insights, based on all that data you’ve been collecting, to your business customers.

So on one hand this is the state of your IT affairs. On the other hand, you are noticing all of the jazzy mobile, social, cloud, digital, and analytical trends in the market place that are making the rounds and you are thinking of all the cool, smart, and trendy ideas you could have your people working on. Of course, showing off a couple of cool and new ways to engage and campaign to the firm’s customers would position you as one who is with the technology curve and one who is thinking of improving the firm’s market share.

Now the question – what should the executive focus on? Should the CIO focus on fixing his organization’s structural issues? Or should he pursue the more flashy, trendy opportunity and have his team innovate towards potentially new products/services? I am not sure if there is really a right or wrong answer. Like my Corporate Strategy professor used to say – It Depends. You ask – On What? One could do a detailed DCF (discounted cash flow) analysis and compare one opportunity with the other. One could consider where executive management is “politically” leaning towards. One could consider the opportunities from a social and/or external perspective, in terms of which would give more mileage. There are a number of internal and external forces that could influence the final “choice” outcome and they would need to be evaluated.

If you ask me, I would lean towards fixing the firm’s structural problems first before investing in any sort of innovation of firm’s products/services. In the long run, what’s inside matters more than what’s outside when it comes to a firm’s success and ability to increase shareholder value. A firm’s culture is the most important building block and helps lay the foundation for all future innovation. You must lay the rail tracks on which you want to travel in the future. Travelling on existing rail tracks will lead you to the same destination, i.e. results.

As always, I welcome you ideas and feedback on my blog posting.

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The typical human being craves attention and likes to be quoted or discussed in a positive light. Brands are no different since they too want to be the center of all conversations in their specific category of product or service. We constantly look at ways to improve our “personal” brands whereas companies look for ways to enhance their corporate brand equity, awareness, recall, and value. Getting people to notice you, know you, admire you, emulate you, imitate you, follow you, etc. is one of the primary motivations for you to becoming part of a social network like FB. So the most logical ROI worthy metric to track here would be how often, how much, and in what light are people talking about you or your product/service? This needs to be tracked and measured not just at the primary location (like FB, Twitter, etc.) but also in secondary and tertiary locations like blogs, news/journals sites, conferences, malls, airports, schools, etc.

Let’s not kid ourselves – after spending all that time taking pictures and posting them, writing things that you consider funny or shocking or useful, and targeting people to follow you or become your fan, you would like them to talk about you (or your content) and recommend you (or your content) to their network. In the marketing circles, this phenomenon goes by WOM (word of mouth) or Viral marketing. Companies want to leverage the network effect of these social media outlets and spread the word about their wares. The momentum generated by a combination of a powerful message and a powerful network is second to none. The quality of the momentum generated here is direct proportional to the quality of the message as well as the quality of the network. What these messages and networks help generate are interactions and transactions that can eventually result in revenue and market share growth that companies are hoping to achieve via the New Media.

So going back to my issue with FB’s value proposition - FB (and for that matter other social sites) needs to invest in innovative toolkits and best practices to help their paying customers be able to generate/publish content that results in valuable interactions and transactions within their network. Content needs to be buzz-worthy, i.e. it needs to be compelling enough for the consumer to remember, it needs to stand out from all the other content that is being peddled to the consumer (in that category or segment), and it needs to be recallable, reproducible, and reliable. There is an opportunity here for FB and its customers to potentially collaborate and come up with a BSC (Balanced Score Card) to measure the performance of their social media investments and link these investments all the way to the desired business outcomes (like loyalty, profitability, productivity, etc.).

As always, would love to hear back from you on my ideas. Let me know if my blog posting is buzz-worthy!

Here we go again. It must be my kismet that I read these two books one after the other and felt the contrast so stark that I’m forced to share my thoughts on these two books. The book, “On the Brink – Inside the race to stop the collapse of the Global Financial System” – is written by our republican minded ex-treasury secretary – who is to be credited for socializing the world of finance; going against his ideology of self regulating free markets. The other – “Lord of Finance - The Bankers Who Broke the World” – is written by Liaquat Ahamed who has been a professional investment manager for twenty-five years – and this book of his won him the Pulitzer a couple of months ago.

While the first book is focused on Mr. Paulson’s experience during his tenure as the Treasury Secretary – the other is one of the best books on the Great Depression and the aftermath. While the first book is written solely based on the recollection from memory (Mr. Paulson claims to possess photographic memory) the other is well researched and referenced book. While the first book drags, the other keeps you involved all the way till the end – even though you know what the answers will be. While the first appears borderline fiction, the later is definitely non-fiction. 

Mr. Paulson does not hide the fact that he likes power and unquestioned power if he could have it. Only a president like Jr. Bush will be ignorant enough to hire him and give him the power that he sought. He not only used it, he used it very wisely and effectively to help out some of his friends and used it effectively to wipe off some of his old nemesis. Mr. Paulson presents no insight into rationale for his decision except for “the financial world will come to an end if we don’t pay these humongous sums to banks”. Mr. Paulson’s narrative only conveys some of the facts as if he is trying to cover the true story while ignoring some of the crucial description and rationale for decisions that he made (such as TARP and its execution). I would rather read – “Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System-and Themselves” by Andrew Ross Sorkin; over this book. I have reviewed the “Too big to fail” on Kazira earlier.

Mr. Ahemad on the other hand, focuses on the four major characters at the beginning of the 20th century –
• Mr. Montagu Norman, Governor of Bank of England,
• Benjamin Strong Jr, First President of the US Federal Reserve System,
• Hjalmar Scacht, Governor of Bank of Germany, and
• Emile Moreau, Governor of Bank of France.

He captures the personality traits and their modes of operations in such a way that this books reads like “The DaVinci Code” – You don’t want to put it down. He sprinkles the book with facts such as – a Russian spy working for the US government was instrumental in laying out policies of the Bretton Woods Conference.

His thoroughness is so good that you feel as if you are living the times and tribulations faced by these four legendary figures in the field of finance during WW I, the great depression, and the WW II. He covers the WW I and WW II in depth and its associated reparation policies and its implication very well. Most notable is his comparison of the great depression to the present financial crisis and his assertion that the Great Depression was equivalent of recent stock market collapse, .com bubble collapse, and the housing market collapse COMBINED … The book also covers the financial and personal philosophies of the leaders at that time such as Churchill, FDR, and Hitler. He also provides great insight into the life of notable financial luminary such as John Maynard Keynes.

OVERALL A GREAT BOOK FOR SOMEONE WHO WISHES TO LEARN THE EXISTING FINANCIAL MODEL AROUND THE WORLD. My only complaint about this book is that it did not cover the time after the great depression – nor it should – But his narrative is so good that I hope he write another book to cover the time frame from the great depression till today.

Let me first start with a disclosure – NO, I am not a member of the Facebook community. But thanks to my network of family and friends that are on FB, and my extensive reading/research pursuits, I have enough data points to be able to draw some logical conclusions. I will make my case by looking at the 4 important aspects of FB’s business model – quality of service, value to individual customers, value to enterprise customers, and influence of current socio-economic environment.

Quality of Service (QoS) – I guess by some measure, every service offered by a company is a consumer service as long as there is somebody at the other end “consuming” the service. But the notion of “consumer service” also implies that there is something tangible and meaningful that the consumer can derive from the service. My assessment is that 80-90 % of the FB services are a sheer waste of people’s time. Games, quizzes, puzzles, avatars, graffiti, etc. – Who needs them! Who cares!! Now there are some services you can subscribe to that help improve your “situational awareness” (like local crimes, events, etc.) but majority are amateur and naïve in flavor.

Value to Individual Customers – Following closely on the heels of QoS, the value and utility derived, or in other words the ROI (Return on your Investment of time and effort), is very low. Think of the opportunity cost? If you were not spending time on FB, what could you be doing? Well, some may honestly not have anything better to do with their time and love FB for its entertainment and chatter value. Majority would, I imagine, have the potential to put their time and effort to better use. I realize that FB is really taking its user inside the erstwhile personal matters and lives of their network of friends, which once upon a time was considered “none of your business”. I am predicting this fad will face its own demise in its own graceful way. Also, with the latest revelations of how FB has been violating all kinds of user-data privacy rules, people will be a lot more prudent about their level of FB engagement.

Value to Enterprise Customers – I believe the enterprise customers are in the “deer caught in front of headlights” syndrome, not sure how to leverage FB but not wanting to be left out of a 500M+ online community. FB has done some harm and has the potential of doing a lot more harm than good to for-profit companies. Companies are building branded FB pages and trying to get as many fans signed up. I get that part. It works well as long as fans are content but then it only takes 1 disgruntled fan to stir things up or one wrong move on your part and things can quickly spiral out of hands. Toyota, BP, P&G, WellPoint, etc. – all leading global brands are having a tough time calming their fans down. You can’t just walk out, so you have to engage and try to calm things down, and all of this costs precious dollars. Once again, I see FB as more of a liability than an asset for enterprise customers.

Influence of current socio-economic environment – This aspect to me is the single biggest factor driving all the hordes of people towards FB. Globally, things are still fairly stagnant. Employment numbers and college enrollment numbers are at historic lows. At the same time, barriers to entering the online world are dramatically low, thanks to the boom in wireless, smartphone, and satellite technologies. Put the two together and it does not surprise me how rapidly the FB numbers are growing. People are idling and FB is a logical destination to go hang out. But does that really add up to a market segment(s) that FB and its enterprise customers can profitably target, on a sustainable basis?? I really do not think so. I would really like to see some sort of measure which indicates the average life and activity level of an FB user. To me, in the long run, both these metrics will be on the decline once the markets turn around and people catch-up with things that have a greater utility in their lives.

Bottom line, I think FB does not have a viable and sustainable business model. It’s got a growing user base, at least for now, but has nothing valuable to offer to them. Majority of the users are in the 15-25 years of age demographic and that segment does not have a whole lot of disposable income or commitment. As always, I welcome your rants and raves on my blog postings.

Let’s first take a look at the state schools and colleges. The two primary sources of revenues for these educational institutions are student tuition and public tax dollars. Thanks to the economy, parents of students are having a tough time coming up with the large tuition and boarding funds for their kids. The parents themselves are having a tough time holding on to their jobs, let alone supporting their kid’s dreams. As for the funding and subsidies from the states, that too is being scaled back with the state itself running in red as a result of the various legacy commitments that include the much controversial retirement and healthcare benefits to government employees. Declining number and value of academic scholarships and other forms of financial aids is another indicator of the financial hardships the aspiring students are having to endure.

On the other end of the talent pipeline are the graduating students; some 200K students graduated from various programs across the country last year. They are entering the marketplace which is already flooded with highly capable, experienced, and seasoned professionals. In economic terms, the supply is ridiculously exceeding the demand and the winners here are the hiring firms and institutions It just means that there is going to be that much more competition for those few jobs and there is going to be downward pressure on wages. As we have been reading for a while, we are in a unique spot where its deflation, not inflation, that is give economists and bankers heartburns. Get this, the unemployment number for people in the age bracket of 21-25 years is approximately 18%, almost double that of the national average for all age groups. Yes, we do not need any other proof to tell us that we have a genuine national crisis at hand here. Instead of doing something that they went to school for, graduates are having to settle for part-time jobs waiting tables or working at the malls.

There used to be a time when we were importing boatloads of graduates and professionals, from emerging countries, to support are overheated economy. Not any more; we’ve got the case of reverse-osmosis where the foreign talent based in US is now heading back to the booming markets of their erstwhile home countries. Economic growth is the only revolution that is going to get us out of this mess, whether it is getting more funds to schools for running the institutions or increase in entry-level hiring within corporate America. After solving the housing, banking, and healthcare crisis, President Obama needs to focus squarely on America’s youth. Left unattended, this national asset can quickly turn into a messy liability with the youth losing their focus and desire to pursue their professional dreams or worst case, resorting to uncivilized, unhealthy, and unworthy activities.

As always, I welcome your comments, good or bad, on my blog postings.

OK, here we go .. Following are some of the important ones …

1. Herd Mentality Bias – This is when you go ahead and buy Yahoo stock at $126 per share just because all of your friends are buying that stock at that price … Thinking out of the group takes a lot of courage and confidence. Try to justify your decisions with facts and not on hearsay …
2. Sunk Cost Effect – This is when you keep the Yahoo stock as it slides from the high of $126 per share to the low of $14 per share … Once you have purchased the shares, most folks get attached to their investment and try to justify their investment as they slide down the curve by saying – hey man, I sunk in so much of my money into it ; I’ll stick with it till the end…
3. Anchoring Bias – This is the bias a car dealership is evoking in you by always placing an MSRP ticket on the car .. This price becomes an anchor that they start negotiating from!!! That is the reason we take another piece of paper in our hand that has the car invoice number for us try to anchor him to our number and negotiate from there. Also, note that employers use this one a lot by asking the new hire about their “expected salary” – This is an anchor so do your research before write that number down.
4. Overconfidence Bias – This is when we say “I’m 99% sure that …” Most of the time we have no clue of the actual probability of our cocksureness but we use the 99% value nonetheless. 
5. Availability Bias – This is when you make decision based only on the only available information. The media plays on this very well – Only those stocks that are covered by the media get more attention from us … Why? Availability of information, that’s why?
6. Correlation Bias – This is when I knock on wood or cross my fingers when I wish to bestow certain continuity to a lucky streak; knowing fully well that there is no correlation between knocking on the wood or crossing my fingers and my good luck streak to continue …
7. Confirmation Bias – This is when I only pay attention to the articles that say “Yahoo stocks will rise again” and pay a blind eye to all of the other articles that provide arguments to the opposite. You may have said this to someone – “He hears what he wants to hear” .. Its confirmation bias … 
8. Hindsight Bias – Also know as “I knew it all along”-bias … This is when we try to justify everything assuming the unfolding events were all a part of your plan .. 
9. “Not-Invented here”-Bias – This is when you say to your colleague – I like what you have done bit I think I like to this thing “my way”!!! 
10. Self fulfilling prophecy – This is when you say “I’m going to have a great day” and that mind set really makes the day go well … This is the reason the positive affirmations/attitude help uplift our life… The problem is that when folks think negative thoughts - they manifest into negative reality as well ...

Once again - The takeaway message here is – Understand that as humans we are irrational and try to understand some root causes of the irrationality and try to minimize it in your life …..

The Icelandic volcano eruption, the Gulf of Mexico’s BP oil spill, and “Oceans 13” style Prozac and Cymbalta (Eli Lily Pharmaceuticals) drug heist are all compelling examples of events that can throw a well established supply chain into disarray and disrupt the normal flow of resources. The volcano event left the airlines scrambling for basic supplies needed to host the stranded passengers. It left the Dutch flower growers wondering how they would get their delicate Tulip orders across to their overseas customers. The BP oil spill is resulting in the disruption of crude oil supply to its Texas and Louisiana refineries, which in turn will start disrupting oil/gas supplies to end customers like factories and gas pumps. The Eli Lily drug theft caused the company to look into alternate means for sourcing and replacing the drug supplies to the impacted distributors and pharmacies.  

Needless to say, the global flavor of business operations and financial markets has provided new opportunities and threats (i.e. challenges) to firms. Firms have already been weighing into their cost of doing operations, factors like political volatility, bureaucratic hurdles, regulatory requirements, and cost of capital. But the recent events, some which I have outlined in this posting, are really asking global firms to broaden their imagination and step up their game when it comes to managing risks across their supply chain. There are a myriad of sophisticated technologies available out there for companies to tap into when it comes to identifying, sizing, and monitoring events that put their supply chain elements at risk. But it all needs to start from the top, with the management team acknowledging that a certain risk is relevant to their business.  

Did the airlines or the flower growers consider volcanoes as a risk? Did BP execs believe that they had adequate controls and tools in place to manage a typical oil spill? Did Eli Lily believe that their distribution network was adequately sound and secure? Supply chain risks are introduced by suppliers, intermediaries, resellers, distributors, and even customers (think of product returns), and the more of these that you have in the mix, the more it is going to cost you to manage the risks. You can either be prudent and make the necessary investments and adjustments upfront, or be naïve and foolish and wait for a volcano to erupt and then react to it. As always, you have choices but it’s up to you to rationalize and prioritize them. Stakes are high and you would rather be safe than sorry. 

As always, I welcome your rants and raves on my thoughts.

I remember, not so long ago, people feeling so liberated when they found a way of being able to anonymously post all those bizarre, tasteless, sometimes downright nasty comments on bulletin boards. However the new social media communities and technologies seem to be taking this art to a whole new level. They’ve made the activity of posting messages into something cool, edgy, and sophisticated. You can now dish out junk in a highly tasteful manner with emoticons, images, artwork, music, fancy fonts, weird sounds, etc. The new social media has created an environment that I seriously feel encourages and dares the users to show their true colors. Social media seems to have opened the floodgate for people where they do not need to hold anything back.

Conversations typically tend to fall in one of the two categories – frivolous and personal. I am thinking of this or that, I was here or there, I did this or that, I hate this or that, etc, etc. I am going to use the famous Pareto’s 80-20 rule over here – In terms of quality, 80% of the conversations occurring on FB and Twitter are nothing but e-waste; 20% could be classified as meaningful, thoughtful conversations. In terms of quantity, once again 80% of the time spent by users at these social forums translates to nothing of value; 20% could be classified as valuable. Like we did not have enough ways to kill (i.e. waste) our time, FB and Twitter have added more convenient ways to do that. You can do it from your computer, you can do it from your smart phone, you can now do it from your LCD/LED TV sets, and pretty soon there will be technology inside your car where you will be able to do all this hands-free.

Now before you jump all over me remember I did say that 20% of these online social communities can add value and are adding value. It’s just the other 80% that I worry about - I hope people realize the consequences of their actions. Considering that every word a user types gets saved for eternity and that companies are seeking out information available online for professional hiring and civil/criminal litigation purposes, these social junkies are literally “living on the edge”. More worrisome is the rising trend of young kids and teenagers getting online and not being smart enough to realize how some of their online postings and rants could come to haunt them down the line.

I am all for social media but I think it is high time for socially responsible media. I am not saying that we need to compromise on our constitutional rights but there needs to be more scientific and objective vetting of the long terms risks and ramifications of social media. Not sure if it is the FCC or the Judiciary that needs to step in but some federal and/or regulatory body does need to get ahead of all this and invest in assessing the risks and putting mitigating controls in place. Freedom is not free and that applies to the social media as well.

As always, I welcome your rants and raves on my thoughts.