Thursday, July 3, 2014

Impact of changing the default

Let's start with a thought experiment - If pregnancy were not the default result of a sexual encounter and to get pregnant people had do something(say wear a device) - just opposite of what it is today people could have sex without any fear of getting pregnant, lawsuits, cost of unwanted childcare etc. Just by changing the default.

Changing the default can have epoch-making effects. Removing TV - Instead of viewing mindless TV shows in the evening your default can be more social, healthy alternatives like walking with your partner. Instead of  a big plate change it a small plate - you will eat lot less and remain fit. Examples galore!

Saturday, September 28, 2013

Commodatization of personalization

Personalization is the holy grail of marketing for avoiding commodatization. Maybach followed a personalized direct marketing and 'Maybach studio' based approach for selling their ultra-premium cars. They made only a thousand or so cars per year - all of them customized(or so called personalized) as directed by the Maybach customers. A very high premium is charged for their exclusivity.

Personalization has become mainstream nowadays. Predictive Analytics(and Big Data) has transformed Art of Personalization into commodatized algorithms- which can make everyone of us feeling special. When I search for a city tour I get hotel recommendations, when I plan to see a show I get discount offers in my mobile etc. It is very helpful for both buyers and sellers - buyers can get good deals when they really need something and sellers can reduce the waste in their marketing budget and improve effectiveness of their customer acquisition cost. We can call this commodatization of personalization.

Opulence still gets a better treatment - an ordinary person probably gets a personalized offer but cannot ask for a fully customized car as a super-rich. But with the improvement of 3D Printing and Internet-of-Things we may see everything personalized for everyone someday. That may be a frustrating day for super-rich. That will be the ultimate win of commodatization over personalization - or it is vice verse?

Wednesday, April 24, 2013

Some thoughts on future of work

  • Most of the work will be automated and that is good for us. Most of us are terrible workers – machines are always preferred for routine jobs.

  • We will see huge unemployment and that will be good. The goal of technology is to make things easier – then why we want everyone to work 60 hours a week? Better we just work as and when required and if and only if our talents are really required. There will not be any resource problem and no need to work for money. Everyone will be able to enjoy extended vacations in Mexican Riviera enjoying guacamole facials and pristine beaches as long as they want. Everyone will have access to best foods. People will work only if they love their work – they won’t get any other privilege in the society except job-satisfaction. Remember today most of the people don’t love their work – they work for money.

  •  There will be a lot of interesting work for people who really want to solve the big problems facing humanity today (energy, pollution etc.). As people need not work for money talented people will be able to get out of high paying mundane jobs and work on truly interesting(and satisfying) problems. And for these selected few working hours will increase - they won't mind as they will truly love their work. As there will be no monetary benefit from those inventions there will be free exchange of ideas accelerating the invention cycle. 

Why Top Leadership makes all the difference

Short answer - Clout factor - a CEO can influence all the employees but a line manager can influence only a few.

The CEO enjoys a tremendous leverage - it's upto him to use it effectively. CEO needs to inspire, CEO needs to lead.

A line manager cannot change the fate of the company but a CEO can - for better or worse. And if laws of thermodynamics or history of corporate failures(most of the companies ultimately fail) are taken to be true - most of the times it is for worse!

How differences are built up over time

I sometimes wonder why there are so many differences in capability, power and wealth between us. We all are human being having almost similar physical and intellectual power and capacity when we are born. But forty years down the line, some become super wealthy or win noble prize whereas some continue to struggle doing some mundane work.

Where and when we are born help. Per Warren Buffett he was very lucky to be born as a white american male. It gives tremendous competitive advantage if your parents are educated, rich and well connected. But every rich kid cannot make it even though he is at advantage. What are the other factors? I believe there are two other critical factors to success – mentoring and continuous improvement. It takes time to become really good at something (ten thousand hour rule). You learn things by practicing over time through trial and error. But proper guidance and coaching can make a big difference as well. A good coach can teach critical skills which takes years to learn by trial and error. Also a good coach gives confidence, helps to keep the focus and to dream big. You need to believe in yourself to become successful.

Let me give an example. Two friends start at the kindergarten – both having almost same potential. One kid gets better attention and guidance from his parents and makes it to a better high school and then to a better college. Better college ensures better classmates – better connections make better opportunities and the peer exchange of ideas increase productive capacities.  Over the years the magic of compound interest makes a huge difference and the two childhood friends cannot believe their gaps.

Success is rare as it needs time and multiplicative impact of so many positive factors. Remember it is not addition – it is multiplication. So you have always the fear - one low score and you are out of the game. Are you feeling hopeless? Let's not be so pessimistic. Yes, it is difficult to fight if you had a bad childhood or had a bad year in college. But remember multiplication has its own advantage as well. Continue the good work and you can find something big positive which can help you overcome all your shortcomings. Yes, miracles do happen - so continue to fight till your last breath.

Saturday, April 20, 2013

Can we capture the successes of so many failures?

There can be only one US President. Only one F1 Champion or only one Best Actor in Academy Awards. Only one city can be chosen for a specific Olympic or only one winner in a National Talent Show.

So may people try for these highly coveted wins..are they all failures. No one remembers the second, forget the third, forth or others who could not make it till end. But are they all failures?

There are so many beautiful songs considered for Song of the Year (sometimes I cannot make a selection - they are all so good!) and so many young genius students who could not make it to Harvard(or IIT whatever!). There are so many 'failed' projects in corporations and so many 'failed' scientific experiments. Are they all failures? No they should not be.

We should celebrate failure and learn from them. There can be specific viewpoints for which lost an election or a specific style which was not preferred by the jury (neither mass judgement nor selective judgement guarantee absolute best selection). Everyone is obsessed with the winner(those on the top gets all the press). So much thought process, innovation and creative energy is wasted - only because we collectively fail to appreciate the people who could not make it to the top. If we can change that we will learn so much. Also the world will be much more enjoyable as everyone will not focus only on winning.

Saturday, April 13, 2013

Agency Problem and HR Profession

Think of a perfect company where almost every employee is happy,engaged and has high performance work ethics. The reason - they were chosen perfectly for the right job and their incentives match their expectations. There is minimum attrition and hence the only recruitment need is for organization growth. Every employee respects each other, believes in company's compensation structure and even everyone knows each other's salaries. This perfect company is very generous with employees making great contributions but also is very fast in firing people with negative work ethics. Hire slow and fire fast keeps the sanity of the workplace.

But things are never quite perfect. Ineffective recruitment is very common - large scale recruitment without proper job-skill match or work ethics alignment creates a lot of very ineffective employees. Each ineffective employee multiply the inefficiency of the company - increasing cost and resource wastage and lowering profitability, customer satisfaction and market competitiveness. Once you have a pool of bad recruits, it is very difficult to attract great people. Two reasons - great people don't want to work in a mediocre company and also bad selectors(who were the initial bunch of bad recruits) cannot or do not want to select great new recruits. The culture of bureaucracy over meritocracy prevails. Good people leave the company. To fill those positions the company needs to attract new recruits at a much higher cost. To compensate the higher cost of new recruits(who are not great quality recruits and are highly overvalued) the company cannot keep a competitive compensation for the existing employees. The result - higher attrition of existing employees(some of them were really good, wanted to stay with the company long term and make a difference) and highly demotivated workforce.

Now the question is which case is attractive for an HR employee or for that matter the HR organization. Theoretically HR success metrics from a shareholder's perspective should be keeping the Highly effective and motivated employees for the highest term possible and thus increase company revenue, profit and market value. But practically - in a perfect world there is nothing much to do for a HR organization and that calls for a small HR organization(HR is a cost center in traditional accounting). Because everyone is happily engaged with their work - you don't need a big team to arrange Team building activities or daily social events(or send Team Engagement emails). Because of low attrition you don't need a big team to handle employee separation or new recruitment activities. Only a small group of HR Generalists can support the essential payroll and clerical tasks. As a HR professional do you really like to work in such a world? Of course no.

That's why we need complex compensation structure, annual performance reviews(where fixed percentage of employees has to be grouped into best, medium,worst categories),high attrition and costly replacement. Oh yes- These poor employees are not engaged - lets' send an invite for virtual cricket match....everybody loves!   

Friday, February 1, 2013

facebook - the real business benefit

Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted - said Einstein.

This is so true for facebook.

Facebook advertising - impact is measurable and hence can be sold to businesses in exchange of revenue. Creating a Facebook page and offering promotions for customer engagement can be successful as well. But I believe very few people care to see a promoted post or banner adds and hence have much limited value than the real benefit Facebook offers in the actual sales process.

Demand Generation through show-off, word of mouth and peer pressure is the real value offered by Facebook to businesses. You see your friends cruising in Carnival and you get inspired to try Cruising. Your wife purchases a Diamond Ring and shows off to her friends. She feels excited when her colleagues like(or for that matter dislike!) or comment on that post. This show-off starts a chain reaction of peer pressure driven impulse buys - now her colleagues want a Platinum-Diamond set for a bigger show-off. And this chain reaction continues...

But can this effect be measured? Not perfectly. Models can be created and Big Data Scientists can try to measure it through shares, likes and actual purchases linked to it but I think it will be very difficult for Facebook to monetize this real benefit. 

The real benefit of social networks can only be felt if Social Networks cease to exist.

Tuesday, September 4, 2012

Looking for Insider Information - Try LinkedIn

LinkedIn can be a great source for Corporate Insider Information (ofcourse a challenge for Company Management - policing past and present employee profiles).

Look for the Experience page of related profiles in LinkedIn and you may get to know the details around IT Systems(Products and even their versions in use), their functions(including partner and interface information), Marketing Strategy for various Products/Promotions and many other Operational Stuff(even some Trade secrets).

The information may not be the latest or greatest - but still not a bad deal.

I am leaving aside the Headhunters advantage of using LinkedIn - every recruitment guy knows there is no better place to search for a Talent with specialized skills. Better -  once you find one - you find many others from the connections. 

Wednesday, May 16, 2012

My Experience in HBS

This April I visited Boston and was lucky to experience a Harvard Business School Class. They have a program where visitors can come and seat within the class to experience the famous 'Case Study method' live in action. I visited a Macroeconomics class and the case study was on India - Indian history, how Indian policy making and demographic profile have worked so far, how Indian growth is different/similar to that of China and finally should someone invest in India. Prof Dante Roscini drove the discussion and made sure all students shared their insights. He is a great teacher and facilitated the discussion very effectively. 

There were many interesting observations from diverse background of students - how Gini changed over time and whether Interest Rate spreads inherently mean Indian investors getting comfortable with Government Debt; whether China's growth in Manufacturing is mainly due to currency manipulation or competitiveness; whether number of engineers produced in India truly indicates the quality of Indian education system etc. The most influencing thought for me was whether democracy is good for India even if that compromises growth. There was no final answer - Indian students supported Indian democracy(even though they accepted it is not True democracy, illiterate voters have no idea on main issues and they vote based on caste or specific preference to a political dynasty) whereas Chinese students supported Growth(everybody loves their country!).

I came back with that burning question in mind - Democracy or autocracy, Chinese speed of execution or slowness of argumentative Indians? Over time I realized that there is no correct answer. Let me provide some business perspectives before I go back to the actual example of governance. Autocracy is a high-risk high-return game. If we have great leadership autocracy is fantastic - we could not have so artistically brilliant Apple Products if there were multiple decision makers deciding on Product features instead of Steve Jobs leading the end-to-end process of keeping the minimalist user-friendliness. At the same time it will be too risky - if there is no one to challenge the leader and the leader makes a bad decision(or become evil). Do you want to build a great product and then launch it in market(keep it neat - don't listen to users - they have no idea what they want) or you want to prototype and test the product incrementally by incorporating the customer feedback(some may be good, some may be very bad - overall a messy process). The Great Apple iPod would not be possible if Jobs listened to his customers for product features. But think about it -  thousands of start-ups fail because they don't listen to the market needs.

In politics and governance same rule applies and history says we can have success/failure in both. We can have great autocratic governance if we have truly visionary leaders(with good intention- rare combination although!). But generally speaking we have seen democracy ruling the game most of the time. Collaboration is messy & slow but it helps to avoid the big mistakes.