I've in the middle of an article on one of the former Berkshire Hathaway's top managers, David Sokol. Unlike the "pedigree" if you will of Harvard, or say a Stanford, this individual went to University of Nebraska, yet rose to become the chairman of MidAmerican. This might not be unusualin itself but his motivation, drive and management principles got my attention. As I usually do, I went to amazon.com and tried to find a book he had written, "Pleased but not satisfied" so I could, as per my personal quest, capture a glimpse on what the secret of his business success is.
Ravi Nagarajan in his review of the book outlined something key:
"Metrics are critical because, in most organizations, what is measured is what gets the attention of managers and employees. By setting key performance indicators at the corporate level and having each operating unit do the same, managers can clearly communicate what is important and what is not. In my experience, great employees will welcome measurement and be motivated by scorecards while poor employees will object. Mr. Sokol's recommendation to always measure against a plan and to correct for changing assumptions and events can improve the results of any organization."
I absolutely think measurement is absolutely essential in determining success. Let me give a simplistic example. In my youth, I went to a British school where the report card would grade on effort and attainment. The attainment was determined on a few exams with little measurement and feedback. To me it was subjective. Sometimes, I felt like I was doing well when I wasn't and vice versa. When I switched to the American school, my grades were primarily determined by a series of tests,almost once a week, all objective, measurable and no "fuzzy logic". Attainment, not effort, was the important factor. If I scored 90% and above, I was quite sure what my end of the year grade would be. I found this very comforting not only because it was measurable but also because it offered instant feedback on where I stood on the attainment scale and how far I was from achieving my end of semester grade.
Now, to me, this is absolutely essential in the workplace. I work for a team where this is all subjective, effort and attainment, purely based on perception. Just falls into a grey area. How far would you know to kick a ball unless you had a goalpost or a yardstick to measure it by? Metrics should be used in every corner of the organization:
*Instant feedback
*Clear indication of attainment
*Supports goal setting
Saturday, April 2, 2011
Sunday, February 27, 2011
A thought on Leadership
I based this entry on a leadership class that I took in my Master's program:
Values are the fundamental backbone by which leaders assimilate, process and make decisions that can affect not only their own position but the impact that they have on their followers. 'True Leadership' requires leaders to have a compelling vision, a foundation of ethical principles and ultimately embody a value set that establishes a mutually cohesive relationship between the leader and his or her followers. Mahatma Gandhi, one of the greatest leaders of our time had no positional power, executive authority or even the experience but yet he galvanized a nation in it's march to freedom and established a set of guiding principles on 'passive resistance' to the injustices that occurred during his time. He offered the compelling vision of an India being free from British rule and persecution along with the principles of integrity, unity, non-violence,
service and passive resistance to injustice. Had he advocated a set of principles based on aggression and violence would he have succeeded? Probably not. This only goes to show that his values were based on a set of ideals that transcended everyday existence which focused on the potential of the human spirit and embraced a sense of divinity. We could probably conclude that Gandhi had Altruistic and Tradition values. People are ready to embrace an individual who not only offers a compelling vision of what could be but one who has in some way captured the ideals that have transcended our daily existence. We are always ready to participate in a realm that is greater than ourselves.
Whether we agree with his politics or not, George Bush, current president of the U.S claims
that the power of liberty can transform societies into institutions of democracy and human idealism. The United States was founded on these very ideals instilling a sense that every individual has the inalienable right and freedom to pursue their dreams as they so wish. Idealism and it's pursuit can be a strong motivating factor as demonstrated by the number of men and women who fight in Iraq and are willing to sacrifice their very lives in a cause that they believe to be noble and greater than their personal existence.
Values are the fundamental backbone by which leaders assimilate, process and make decisions that can affect not only their own position but the impact that they have on their followers. 'True Leadership' requires leaders to have a compelling vision, a foundation of ethical principles and ultimately embody a value set that establishes a mutually cohesive relationship between the leader and his or her followers. Mahatma Gandhi, one of the greatest leaders of our time had no positional power, executive authority or even the experience but yet he galvanized a nation in it's march to freedom and established a set of guiding principles on 'passive resistance' to the injustices that occurred during his time. He offered the compelling vision of an India being free from British rule and persecution along with the principles of integrity, unity, non-violence,
service and passive resistance to injustice. Had he advocated a set of principles based on aggression and violence would he have succeeded? Probably not. This only goes to show that his values were based on a set of ideals that transcended everyday existence which focused on the potential of the human spirit and embraced a sense of divinity. We could probably conclude that Gandhi had Altruistic and Tradition values. People are ready to embrace an individual who not only offers a compelling vision of what could be but one who has in some way captured the ideals that have transcended our daily existence. We are always ready to participate in a realm that is greater than ourselves.
Whether we agree with his politics or not, George Bush, current president of the U.S claims
that the power of liberty can transform societies into institutions of democracy and human idealism. The United States was founded on these very ideals instilling a sense that every individual has the inalienable right and freedom to pursue their dreams as they so wish. Idealism and it's pursuit can be a strong motivating factor as demonstrated by the number of men and women who fight in Iraq and are willing to sacrifice their very lives in a cause that they believe to be noble and greater than their personal existence.
Friday, February 25, 2011
Tuesday, February 22, 2011
Ask and ye shall recieve!
I'm reading a book on retaining good employees. One of the key strategies that managers don't often employ: Asking! That's right...Asking what it would take to retain that employee. Letting that person that he or she is valued and is expected to continue playing a significant role to that organization. Too often managers take for granted that these employees are satisfied without every knowing the reality and often act to late when there was a window to act.
Now, the focus is often on good employees but any employee can become valuable to an organization. How? Identifying what that employee wants and finding a way to fulfill it and most importantly letting that employee know that his/her contribution to the organization, however small it maybe, is certainly valued.
Acknowledgment is a key factor in improving employee morale and productivity! I learnt that every human being regardless of the status he or she holds in society wants to be acknowledged. The worst thing you can do is to ignore or take people for granted. Yeah, it's a small thing but it goes a long way in making people feel that they count. Money can be a short term incentive but what really drives people? That they count!
Acknowledge and Ask!
Now, the focus is often on good employees but any employee can become valuable to an organization. How? Identifying what that employee wants and finding a way to fulfill it and most importantly letting that employee know that his/her contribution to the organization, however small it maybe, is certainly valued.
Acknowledgment is a key factor in improving employee morale and productivity! I learnt that every human being regardless of the status he or she holds in society wants to be acknowledged. The worst thing you can do is to ignore or take people for granted. Yeah, it's a small thing but it goes a long way in making people feel that they count. Money can be a short term incentive but what really drives people? That they count!
Acknowledge and Ask!
Thursday, February 10, 2011
How Dell did it
The first step was to set up a factory in India. "Manufacturing locally cut delivery time by almost 50% and improved profitability," says M.R. Sundaresan, general manager of operations for Dell India. It also reduced waiting time to less than eight days.
Dell also changed the way it sold computers. While buying online remained an option, the company set up exclusive outlets across the country, à la Apple (AAPL) -- the first time it has experimented with the retail model -- and hired a battery of sales affiliates. Dell ensured that these affiliates, or channel partners, were given incentives to sell. The company also made virtually no investment in warehousing and delivering products right to customers' doors upon demand. Once customers could touch and feel the product, it was easier for Dell to convince them to buy. And buy they did.
This wasn't technically Dell's first foray into the country. Dell had quietly entered India back in 2000, focusing on large enterprise and government business. By 2007, Dell's business was worth $250 million in this segment. It also cashed in on the outsourcing wave, and had set up four customer care and tech support centers in India for its global customers. But, of course, Dell wanted a slice of the increasingly lucrative personal computers space.
"There was no charter or blueprint and we could not copy our competition. We were asked to go and figure how to build the India business," recalls Dell India's former country general manager, Rajan Anandan, who was sent to India from Dell in the U.S. in 2006. (Anandan left Dell in 2008 and joined Google India as vice president of sales and operations earlier this year.) He set an aggressive revenue target of $1 billion within three years – a milepost he believed would catapult Dell to the No. 1 spot in the market. "Such targets were not heard of within the company and never in the industry," he says. "Dell China took five or six years to become a billion dollar business." Dell India ultimately achieved the $1 billion revenue target in 2009-10, a year behind schedule due to the economic downturn.
The India growth story was powered by a "billion dollar core team," which came together in the first six months after Anandan's relocation. The team consisted of people from rivals HP and IBM (IBM), and even Hindustan Unilever, Whirlpool of India, and Airtel India. Sundaresan, for instance, left Whirlpool to set up Dell's first India factory, in Sriperumbudur near the southern city of Chennai, which he got up and running in just eight months. The industry average for a plant that size is at least 12 to 18 months.
Adopting the insurance agent model
On the distribution front, Dell divided the Indian market between 35 master sales affiliates. It sidestepped the established national, regional, and retail distribution model to instead follow a model typically used for insurance agents. Thousands of registered individual sales affiliates would reach out to retail customers in person and give them a first-hand product experience at their doorstep. Had Dell followed the strategy adopted by its competitors, it would have been forced to change its built-to-order model. The result would have been squeezed margins, extended credit lines, and rigid incentive structures.
Simultaneously, Dell opened 38 exclusive stores across India, and joined hands with retailers such as the Tata group's Croma and Future Group's eZone for a shop-in-a-shop counter for its products. These outlets are franchised to the sales affiliates, who are also responsible for supporting field affiliates. "In a way, these affiliates became an extension of Dell offices in their region," says Mahesh Bhalla, executive director and general manager for consumer and small and medium business for Dell India.
Dell backed this hybrid retail model by extending onsite service (technicians coming to individuals' homes) in 650 cities to retail and small business customers as well. Previously this service was offered only to enterprise and government accounts. The new distribution model worked for Dell, giving it access to even rural areas, where customers would not be able to easily order online, and where setting up retail outlets was not viable.
The India team realized that both the consumer and small business segments are driven by strong distribution networks, especially in emerging markets. They looked at Lenovo's distribution model in China, for example, and found that it used its strong channel relationships to penetrate beyond smaller provincial cities into rural markets. There were also complaints in India of Lenovo's margins being under pressure due to the overcrowding of distributors, delayed incentives, and dumping of products in the existing partnerships between national and regional distributors and local retailers. It was good news for Dell.
Analysts say these factors converged at the right time to give Dell an edge. "While Dell reorganized itself for challenges in emerging markets like India, it also benefited from the fact that the competition was grappling with its own problems," says Diptarup Chakraborti, a former analyst with research firm Gartner.
Advertising followed, with the company opting for real-life entrepreneurs instead of celebrities to endorse its products. A "Take Your Own Path" campaign in 2008 featured corporate role models such as Raman Roy, considered the father of India's back-office processing industry, and P. Rajendran, co-founder and chief operating officer for the Indian technology company NIIT. "They didn't have the glamour quotient but were inspirations to many," says Amit Midha, president of consumer and small and medium business for Dell Asia-Pacific/Japan.
Competitors gird for battle
However, the competition is not ready to let market share slip that easily. Globally, HP and Acer have gained market share to push Dell down to No. 3, while Lenovo continues to dominate China. It's Dell India that is moving against the tide.
Analysts expect the fight to intensify in the coming quarters as the competition reorganizes and fights for a comeback. "HP cracked the Indian retail market long back, and Lenovo has a very strong channel strategy," notes Bryan Ma, associate vice president of Asia Pacific for the research firm IDC. "They are facing a temporary setback (Dell's rise) and will return with a vengeance."
HP has made changes in its distribution and retail network. From a one-size-fits-all strategy, it is now paying more attention to what's selling and what's not. "We are increasing our product portfolio according to market demand," says Vinay Chandra Awasthi, director of personal systems groups for HP India Sales. Lenovo, for its part, will neither change its three-layered channel model—which includes a national distributor, a regional distributor and a retailer—nor will it opt for end-to-end services. But it is working toward better relationships and improved trust among partners. "We will increase engagement with 400 select partners for better customer focus, and in the next 12 months to 18 months add 1,000 low-cost exclusive stores in smaller towns and suburbs to expand our reach," says Amar Babu, managing director of Lenovo India.
Both HP and Lenovo have factories in India: HP's plant in the far northern state of Uttarakhand has a capacity of 5.7 million units (personal computers as well as servers); Lenovo's factory in southern Puducherry (formerly Pondicherry) can produce 3 million units. Both companies shuttered a plant each during the economic slowdown, having overestimated the potential of the Indian market.
Globally, Dell has also closed factories as part of its plan to save $4 billion in operating costs. "The thrust is to get a more profitable revenue market share," says Sameer Garde, vice president of OEM solutions at Dell in the U.S. He was part of the team that chalked out the India plan and was managing director of India operations before moving to a global role in the Dell headquarters. The next step is to try to lower costs in India as well. Sundaresan regrets the lack of a supplier ecosystem in India, which could make pricing competitive. Dell globally sources around 1,300 components worth $26 billion from China, including components that arrive at the facility in India. Sundaresan says that if India had manufacturers who could make even 10% of components that Dell alone buys, "it will have a huge multiplier effect on the sector and the entire economy."
Dell is betting on opportunities due to increased data access and demand for solutions around mobility, virtualization, and cloud computing. It has been renewing its products and services portfolio since 2007 and has diversified into areas such as smartphones, tablets, and printers. The Vostro range of notebook computers was specifically designed for the Indian small business segment. The strategy worked to Dell's advantage, and now competitors are following suit. In the last two years, Dell has invested almost $600 million to add new skill sets, service capabilities, and intellectual property through 14 acquisitions. Dell execs say there's more to come. "We are open to partnerships and acquisitions, whatever it takes to bring the cost down, at each level of our offering," says Garde.
For Dell, India has emerged as a local and global service delivery hub. It is the only market outside the U.S. with all business functions—customer care, financial services, manufacturing, R&D, and analytical services—operational at the local level and giving global support. "We evaluated market trends and growth potential, enabling us to invest ahead of the curve in India, resulting in our phenomenal growth," says Midha. It is a growth story that resonates around the world.
Dell also changed the way it sold computers. While buying online remained an option, the company set up exclusive outlets across the country, à la Apple (AAPL) -- the first time it has experimented with the retail model -- and hired a battery of sales affiliates. Dell ensured that these affiliates, or channel partners, were given incentives to sell. The company also made virtually no investment in warehousing and delivering products right to customers' doors upon demand. Once customers could touch and feel the product, it was easier for Dell to convince them to buy. And buy they did.
This wasn't technically Dell's first foray into the country. Dell had quietly entered India back in 2000, focusing on large enterprise and government business. By 2007, Dell's business was worth $250 million in this segment. It also cashed in on the outsourcing wave, and had set up four customer care and tech support centers in India for its global customers. But, of course, Dell wanted a slice of the increasingly lucrative personal computers space.
"There was no charter or blueprint and we could not copy our competition. We were asked to go and figure how to build the India business," recalls Dell India's former country general manager, Rajan Anandan, who was sent to India from Dell in the U.S. in 2006. (Anandan left Dell in 2008 and joined Google India as vice president of sales and operations earlier this year.) He set an aggressive revenue target of $1 billion within three years – a milepost he believed would catapult Dell to the No. 1 spot in the market. "Such targets were not heard of within the company and never in the industry," he says. "Dell China took five or six years to become a billion dollar business." Dell India ultimately achieved the $1 billion revenue target in 2009-10, a year behind schedule due to the economic downturn.
The India growth story was powered by a "billion dollar core team," which came together in the first six months after Anandan's relocation. The team consisted of people from rivals HP and IBM (IBM), and even Hindustan Unilever, Whirlpool of India, and Airtel India. Sundaresan, for instance, left Whirlpool to set up Dell's first India factory, in Sriperumbudur near the southern city of Chennai, which he got up and running in just eight months. The industry average for a plant that size is at least 12 to 18 months.
Adopting the insurance agent model
On the distribution front, Dell divided the Indian market between 35 master sales affiliates. It sidestepped the established national, regional, and retail distribution model to instead follow a model typically used for insurance agents. Thousands of registered individual sales affiliates would reach out to retail customers in person and give them a first-hand product experience at their doorstep. Had Dell followed the strategy adopted by its competitors, it would have been forced to change its built-to-order model. The result would have been squeezed margins, extended credit lines, and rigid incentive structures.
Simultaneously, Dell opened 38 exclusive stores across India, and joined hands with retailers such as the Tata group's Croma and Future Group's eZone for a shop-in-a-shop counter for its products. These outlets are franchised to the sales affiliates, who are also responsible for supporting field affiliates. "In a way, these affiliates became an extension of Dell offices in their region," says Mahesh Bhalla, executive director and general manager for consumer and small and medium business for Dell India.
Dell backed this hybrid retail model by extending onsite service (technicians coming to individuals' homes) in 650 cities to retail and small business customers as well. Previously this service was offered only to enterprise and government accounts. The new distribution model worked for Dell, giving it access to even rural areas, where customers would not be able to easily order online, and where setting up retail outlets was not viable.
The India team realized that both the consumer and small business segments are driven by strong distribution networks, especially in emerging markets. They looked at Lenovo's distribution model in China, for example, and found that it used its strong channel relationships to penetrate beyond smaller provincial cities into rural markets. There were also complaints in India of Lenovo's margins being under pressure due to the overcrowding of distributors, delayed incentives, and dumping of products in the existing partnerships between national and regional distributors and local retailers. It was good news for Dell.
Analysts say these factors converged at the right time to give Dell an edge. "While Dell reorganized itself for challenges in emerging markets like India, it also benefited from the fact that the competition was grappling with its own problems," says Diptarup Chakraborti, a former analyst with research firm Gartner.
Advertising followed, with the company opting for real-life entrepreneurs instead of celebrities to endorse its products. A "Take Your Own Path" campaign in 2008 featured corporate role models such as Raman Roy, considered the father of India's back-office processing industry, and P. Rajendran, co-founder and chief operating officer for the Indian technology company NIIT. "They didn't have the glamour quotient but were inspirations to many," says Amit Midha, president of consumer and small and medium business for Dell Asia-Pacific/Japan.
Competitors gird for battle
However, the competition is not ready to let market share slip that easily. Globally, HP and Acer have gained market share to push Dell down to No. 3, while Lenovo continues to dominate China. It's Dell India that is moving against the tide.
Analysts expect the fight to intensify in the coming quarters as the competition reorganizes and fights for a comeback. "HP cracked the Indian retail market long back, and Lenovo has a very strong channel strategy," notes Bryan Ma, associate vice president of Asia Pacific for the research firm IDC. "They are facing a temporary setback (Dell's rise) and will return with a vengeance."
HP has made changes in its distribution and retail network. From a one-size-fits-all strategy, it is now paying more attention to what's selling and what's not. "We are increasing our product portfolio according to market demand," says Vinay Chandra Awasthi, director of personal systems groups for HP India Sales. Lenovo, for its part, will neither change its three-layered channel model—which includes a national distributor, a regional distributor and a retailer—nor will it opt for end-to-end services. But it is working toward better relationships and improved trust among partners. "We will increase engagement with 400 select partners for better customer focus, and in the next 12 months to 18 months add 1,000 low-cost exclusive stores in smaller towns and suburbs to expand our reach," says Amar Babu, managing director of Lenovo India.
Both HP and Lenovo have factories in India: HP's plant in the far northern state of Uttarakhand has a capacity of 5.7 million units (personal computers as well as servers); Lenovo's factory in southern Puducherry (formerly Pondicherry) can produce 3 million units. Both companies shuttered a plant each during the economic slowdown, having overestimated the potential of the Indian market.
Globally, Dell has also closed factories as part of its plan to save $4 billion in operating costs. "The thrust is to get a more profitable revenue market share," says Sameer Garde, vice president of OEM solutions at Dell in the U.S. He was part of the team that chalked out the India plan and was managing director of India operations before moving to a global role in the Dell headquarters. The next step is to try to lower costs in India as well. Sundaresan regrets the lack of a supplier ecosystem in India, which could make pricing competitive. Dell globally sources around 1,300 components worth $26 billion from China, including components that arrive at the facility in India. Sundaresan says that if India had manufacturers who could make even 10% of components that Dell alone buys, "it will have a huge multiplier effect on the sector and the entire economy."
Dell is betting on opportunities due to increased data access and demand for solutions around mobility, virtualization, and cloud computing. It has been renewing its products and services portfolio since 2007 and has diversified into areas such as smartphones, tablets, and printers. The Vostro range of notebook computers was specifically designed for the Indian small business segment. The strategy worked to Dell's advantage, and now competitors are following suit. In the last two years, Dell has invested almost $600 million to add new skill sets, service capabilities, and intellectual property through 14 acquisitions. Dell execs say there's more to come. "We are open to partnerships and acquisitions, whatever it takes to bring the cost down, at each level of our offering," says Garde.
For Dell, India has emerged as a local and global service delivery hub. It is the only market outside the U.S. with all business functions—customer care, financial services, manufacturing, R&D, and analytical services—operational at the local level and giving global support. "We evaluated market trends and growth potential, enabling us to invest ahead of the curve in India, resulting in our phenomenal growth," says Midha. It is a growth story that resonates around the world.
Friday, February 4, 2011
Saturday, January 29, 2011
Steps to turning around companies
I'm doing research into how to turn around failing companies with the anticipation that I'll end up doing this someday. Here's what I've learnt:
1. Trade market share for profitability. When a company is in the red, focus on products that are still profitable and get rid of products that no longer contribute to the bottom line.
2. Align the organization to support products that are not on the mark but are needed. Focus on finding a niche and specializing and being the best 2 or 3 product areas...There's nothing worse than running with the herd!
more to come...
1. Trade market share for profitability. When a company is in the red, focus on products that are still profitable and get rid of products that no longer contribute to the bottom line.
2. Align the organization to support products that are not on the mark but are needed. Focus on finding a niche and specializing and being the best 2 or 3 product areas...There's nothing worse than running with the herd!
more to come...
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