Wednesday, October 31, 2007

Applying Newton’s Laws to NPD - II

In the November issue article we saw how the Newton’s laws of motion can be applied to new product development Ref November issue “Applying Newton’s Laws to New Product Development (NPD)”. This article will deal with the detailed analysis of each component and will provide the mathematical correlation between the two conjectures.

In Newtonian mechanics you have to be in one reference plane so that all the activities like motion, acceleration etc can be defined with respect to it. Similarly, while doing the analysis of NPD we will use two reference planes i.e. Company’s reference plane and Customer’s reference plane. By the reference plane I mean the way things are professed and the way it is conceptualized. As the reference plane changes from the customer point of view to company point of view, there is tremendous change in perception and hence aligning the reference planes becomes a gargantuan task. Even though it’s a difficult task, if done successfully it would prove to be immensely beneficial to the company and the customer.

In the first law we saw that “The customer will remain at rest or in other words not buy your product or will buy the bare minimum of products from you unless he is applied by the intangible force of Value addition”.

To move a football at rest, someone must kick it and to throw a stone upwards, one has to give it an upward thrust. Clearly, some external agent is needed to provide force to move a body from rest. Hence to increase the consumption of the product the companies also have to apply intangible force in terms of value addition.

Let us see what the value from the customer point of view is. Value to the customer is the worth in terms of technical, economic, service and social benefits a customer receives in exchange for the price he pays for an offering. Hence
Value = f (technical, economic, service, social benefits) …….. (1)
i.e. the value is the function of these four major components and is directly proportional to each components. Value is considered as the vector quantity as it has both magnitude and direction as the perception of value for customer is different and that of company is different, with respect to the reference planes discussed. Hence the first law states that if the Value addition is done through the change in any four components of equation (1) the customer will increase the consumption of that product. Value can be considered as the Force in that of Newtonian mechanics:
Force = Value
F = V…………………………..………………..... (2)

In the second law we saw that “The frequency of purchase of your product is directly proportional to the number of problems that the product solves for the customer.”
In Newtonian mechanics
Force = mass * acceleration
F = m * a………………………………………… (3)
Mass and acceleration are the factors, which define how fast the body will move and are directly proportional to the force applied on it. If same force were applied to a heavier body and the lighter body, then the lighter body tends to accelerates faster than that of heavier body.

The Mass can be correlated to the “Mindset Rigidity” of the customer. Changing the perception of a customer is a very difficult task. Due to this impenetrability it becomes all the more essential to look at techniques like change management, newer promotion strategies, influential brand ambassadors etc. But this discussion is beyond the scope of this paper we consider, but Mass in Newtonian mechanics can be regard as equal to Mindset rigidity of the customer. Hence,
Mass = Mindset Rigidity
m = MR……………………………………….… (4)

Higher the mass, higher force is required to move the body. Similarly grueling the rigidity of the mind of the customer, higher force is required in terms of perceived value addition to influence his buying decisions.

Acceleration of the equation (3) can be correlated to the frequency of purchase of the product.
Hence,
Acceleration = Frequency of Purchase
a = FP…………………………………………… (5)
or, Value = Mindset Rigidity * Frequency of Purchase ……………….from (1,2,3,4,5)
V = MR * FP
FP = V/MR
i.e. Frequency of Purchase = f (technical, economic, service, social benefits) / Mindset rigidity
The above equation shows that Frequency of purchase is directly proportional to the value and inversely proportional to the Mindset rigidity.
i.e FP α V
and FP α 1/ MR
Above equations implies that there are two ways to increase the consumption of the product offered by company. The company can provide more value to the customers in terms of the technical, economic, service and social benefits or they can influence the purchasing decision of the customer by changing their mindset rigidity.

In the third law we saw that “For every action of a company on the product front it has an equal and opposite reaction from its consumers”
This can be understood by considering the following fig.


The Value provided by the company is in terms of usage benefits to the customer, his need accomplishment etc and is like force (Va) acting on the product. The product is similar to an object under the Newtonian mechanics. The Value forgone by the customer is the money what he is paying to buy that product and this is also a force (Vc), which is acting on the product but is in opposite direction of (Va). The customer is bound to think, whether he should buy this product or can do without it? If the Va is greater than the Vc then the customer buys the product i.e. the product moves from company’s hand to the customers hand, else the product lies with the company only.

Assessing and truly understanding value in business markets is the stepping-stone to increasing profitability. Hence gauging and communicating what your products and services are worth to customers are very essential for a company’s success. Finally the customers when deciding to buy the product for use, compares the differential gain i.e. the difference between the value and price. The customer would buy the product when the perceived value is greater than the price. For attaining and retaining loyal customers every company should provide a differential gain greater than that given by the competitors.

i.e. (Value – Price)Company > (Value – Price)Competitors for customers to buy your product.
This can be done by providing same value to customer at lower price or providing more value at same price. Rarely does the price and value change at the same time.

When company looks at coming out with tons of new products, it has to check whether the value it is providing is more than the price. But many a times companies make a mistake in judging the perceived value, as company and customer are in different planes. Hence company should carry out pilot surveys and price the new product according to the perceived value. Once this is done, an intangible force works on the customer and the company makes headway in bending the rigidity of the customer. But this is not a one-time fix, the company should constantly gauge the competition and the changing perceptions of the customer and come up with newer deals – i.e. provide higher value at same price or same value at lower price.

Newton had the feeling of “Eureka”, when the apple fell on his head; it was an external stimuli. Similarly a company should keep throwing apples i.e. value at the customer, so that they also get a feeling of “Eureka” and keep buying the product.

Future Strategy for Integrated Logistics Supply Chain Management

Introduction

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. It is an integrating concept, concerned with planning, sourcing, making and delivering goods and services from the initial supplier to the end customer. As the external environment is changing rapidly companies have daunting task to maintain sustainable competitive advantage over a long run period.

The logistics cost forms a major chunk of GDP and has to improve a lot in developing nation mostly. For e.g. there is an immense potential for cost savings for India if it can bring down its logistics costs from the current level of 13% of GDP to a level similar to that of the US – 8.7% of GDP. The savings would be around $20 billion resulting in a potential 4.3% cut in prices of Indian goods globally, making them more competitive

As the competition is getting stiffer the improved service and reduced costs can only be achieved through better management of flow of goods from plant to user. To capitalize on this opportunity, the focus should be on following:

Thinking of physical distribution process as a system in which all the components and functions must be properly balanced.

Taking a fresh look at the responsibilities, capabilities, and organizational positions of executives in traffic, warehouse management, inventory control and other functions which make up the overall system.

Re-examining the company’s physical plant and distribution procedures in the light of technical advances in such areas as transportation, data processing and materials handling.

In this paper I shall first examine the pressing need for improved management of companies ILSCM and then discuss the future of integrated logistic supply management across the industry, which will depend on huge transformation and what companies should follow. An effective and efficient ILSCM is the key to success as it helps in developing sustainable competitive advantage and strategic fit among process for any organization.


Need of Integrated LSCM (Logistics & Supply Chain Management)

SCM remains a high priority for manufacturers as a way to improve margins, retain & increase market share. Early supply chain management success included improved relationships between warehousing and transportation within companies resulting in reduced inventory and better response times to customer requests for products and services.

SCM then entered a logistics stage where other functional areas within companies joined forces to incorporate manufacturing, procurement, transportation, distribution, and marketing to more effectively compete in the marketplace. This stage was aided by the use of telecommunications, electronic data interface, and other technological advances that made the transfer of information more transparent across the functional areas between companies.

The future Strategy for ILSCM – Matching Supply Chains with Products

The first step in devising an effective supply chain strategy is to consider the nature of the demand for the products one’s company supplies. Many aspects are important – for example, product life cycle, demand predictability, product variety, and market standards for lead time and service (the percentage of demand filled from in-stock goods). The products on the basis of their demand patterns, falls into one of the two categories: they are either primarily functional or primarily innovative. And each kind category requires a distinctly different kind of supply chain. The root cause of the problems plaguing many supply chain is a mismatch between the type of product and type of supply chain.

Functional products include the staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations. Because such products satisfy basic needs, which don’t change much over time, they have stable, predictable demand and long life cycle (usually more than 2 years). But their stability invites competition, which often leads to low profit margins of around 5% to 20% only.

To avoid low margins, many companies introduce innovations in fashion or technology to give customers an additional reason to buy their offerings. Although innovation can enable a company to achieve higher profit margins, the very newness of innovative products makes demand for them unpredictable. In addition, their life cycle is short- usually just a few months- because as imitators erode the competitive advantage that innovative products enjoy, companies are forced to introduce a steady stream of newer innovations. The short life cycle and the great variety typical of these products further increase unpredictability.

With their high profit margins (usually 20% to 60%) and volatile demand, innovative products require a fundamentally different supply chain than stable, low-margin functional products do. To understand the difference one should recognize that a supply chain performs two distinct types of functions: a physical functions and a market mediation function. A supply chain’s physical functions is readily apparent and includes converting raw materials into parts, component, and eventually finished goods, and transporting all of them from one point in the supply chain to the next. Less visible but equally important is market mediation, whose purpose is ensuring that the variety of products reaching the marketplace matches what consumers want to buy.

Each of the two functions incurs distinct costs. Physical costs are the cost of production, transportation and inventory storage. Market mediation costs arise when supply exceeds demand and a product has to be market down and sold at a loss or when supply falls short of demand, resulting in lost sales opportunities and dissatisfied customers.

Right Supply-Chain Strategy


Fig1. Matching supply chains with products
The above matrix shows the matching of supply chain with products. The Efficient supply chain is the process where the supply of predictable demand is met efficiently at the lowest possible cost. The manufacturers focus on maintaining high average utilization rate and they focus on shortening lead time as long as it doesn’t increase cost. The Responsive supply chain process is for responding quickly to unpredictable demand in order to minimize stock outs, forced markdowns, and obsolete inventory. Manufacturers deploy excess buffer capacity in this regard.
For companies to be sure that they are taking the right approach, they first must determine whether their products are functional or innovative. The next step is for managers to decide whether their company’s supply chain is physically efficient or responsive to the market. Having determined the nature of their products and their supply chain’s priorities, manager can employ a matrix to formulate the ideal supply-chain strategy. The four cells of the matrix represent the four possible combinations of products and priorities.

Managers at many companies continue to lament that although they know their supply chains are riddled with waste and generate great dissatisfaction among customers, they don’t know what to do about the problem. The root cause could very well be a misalignment of their supply and product strategies. Realigning the two is hardly easy. But the reward- a remarkable competitive advantage that generates high growth in sales and profit – make the effort worth it.

Sunday, October 21, 2007

BPR - Business Process Reengineering

Courtesy: Anurag Kushwaha

BPR(Business Process Reengineering)

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.
(Hammer & Champy, 1993)
Purpose of BPR
· Purpose of reengineering is to ”make all your processes the best-in-class”.

BPR Versus Continuous Improvement

BPR
· Radical Transformation
· Process & Technology Focus
· High Investment
· Rebuild
· Champion Driven


Continuous Improvement
· Incremental Change
· People Focus
· Low Investment
· Improve Existing
· Work Unit Driven

Why Reengineer?
· Customers

  • Demanding
  • Sophistication
  • Changing Needs

Competition

  • Local
  • Global

Change

  • Technology
  • Customer Preferences


Why Organizations Don’t Reengineer?
· Complacency
· Political Resistance
· New Developments
· Fear of Unknown and Failure


Performance
· BPR seeks improvements of
o Cost
o Quality
o Service
o Speed

Key Characteristics
· Systems Philosophy
· Global Perspective on Business Processes
· Radical Improvement
· Integrated Change
· Focus on End-Customers
· Process-Based
· People Centred

Friday, October 19, 2007

Think Without Ink-Book Section

by K Venkatraman

Hello friends
This post was originally posted by me at www.books.blogomania.in and is crossposted here.

I read this book around two years back during my MBA entrance preparation. It was recommended to me by one of my friends at IIM L. The book was for the purpose of enhancing Quantitative Aptitude.

It carried lot of techniques to improve quantitative aptitude. It had a nice gel of vedic mathematics and other best calculation practices. But, more than just a mathematical calculations, the book tried to give the direction to the readers regarding their very attitude. The following were the three approaches the author considered.

Pandit

He is a guy who is systematic and cautious, and solves problems using conventional techniques. He believes strongly that problems have to be solved using a step by step approach. When he is solving his problems, you will see him sitting erect in his chair and holding a pen and a book. Pen and paper are his main tools. His dress sense impresses his grandparents. He prefers rice and sambar, or rotis and curry for his lunch. He believes in the “ early to bed and early to rise” principle, and never sleeps in between.

Fundu

Our friend fundu oloves to play around with fundamentals. He experiments with the fundamentals in any problem, till he is convinced of better methods. He does not care for the conventional approach; however, he respects the basics. It is very difficult for anyone to make out what he has written, as he enjoys writing different approaches in his own style. He dresses normally, but with many little variation as a zip instead of buttons for his shirts and one or two pockets in hidden places.

Punter

The punter is strictly result oriented person, who careds a damn for method. He usually starts solving problems from the answer, choices. Rather than going deep into the problem, he tries to read the examiner’s minds. He hates using pen and paper for solving problems. His one and only objective is to crakc the problem in the shortest possible time without writing anything on paper.

His dressing style irritates his parents and grandparents. He eats whenever he is hungry, and sleeps whenever he feels like. He prefers odd combinations like chapatis with jam or bread with sagu etc.

On getting aware about these three approaches, the book didn’t only helped me to improve my quantitative calculations, but also my approach towards life. Earlier I used to be more like a Pandit, but now I am more like Punter.

This book had an ever ending impact on my life. And I would recommend it to every CAT or GMAT aspirant.

More information about it can be found at www.trytwi.com

Excerpts from Lecture by Alyque Padamsee

Excerpts from Lecture by Alyque Padamsee...had a lecture by Alyque Padamsee today. Here are some interesting ideas and excerpts..afterlistening to him i have no doubts abt why he is so famous...Idea management. Which is the only global indian brand - hotmail that too only cos Sabeer Bhatia happens tobe indian.In contrast a brand tht made a country famous.. Nokia..So why did microsoft pay him $400 mil ?? why would you pay such a huge sum to make emailavailable to people for free ...ad revenues ? only a small percent... it was bcos it gave MS a ready database of targetaudience to whom it could sell software. The people who register are in marketting jargonhis target segement, today it has close to 200 mil users, thus it gives MS a straight offthe jacket list of computer users whom it can target to sell its software. This is what billgates paid sabeer bhatia for... thus success = idea + entrepreneurial skillso how do you get ideas ??So you need "to take advantage of the unexpected" e.g of innovations by chance ???1. Post-it : developing a superglue and realised that it comes off.. 2. Viagra : developing a medicine for the heart and they found it had other benefits3. Walkman : Akaio Morita visited a exhibition of electric goods in europe and saw adictaphone... learnt tht it can be used to record letters to your secretary when you aretravelling, which you can then hand it to him/her when you are back. He bought it, and laterwhen he was partying at a dicso he liked a song being played there and recorded it on thedictaphone. Later when flying back to tokyo he was playing tht song back and booommmm....the idea of a walkman...So how to develop your creativity... everyday look at what you do and say how can i improveit ... while brushing your teeth, think is there a way i can better this toothbrush ??maintain a dairy and do it daily.. since most ideas are building up on innovation...e.g mobile phone -- telephone..neumatic tyre, bulbs tht consume less electricity..Innovations at Lintas..1. Five Star Loo - Lintas made profit of Rs 5 lac and they were discussin where to spendit.... they finaly spent it to update their loo so tht it was better than the one atOberoi...sounds crazy..the benefits... the next day when he came to find there there was a long Q outside the loo..and they were relatives of employees who wanted to see the famed loo...Seeing this he then invited the then MD of HLL to a meeting.. a long meeting.. and finallywhen the MD had to use the LOO.... and Lintas got a big order plus recommendations...2. Mother Terresa donations - Board members used to come late for meetings.. So he put a jarwith a photo of Mother Teressa. You pay Rs 100 per min you are late for charity...Initially they got lots of money for charity.. but then soon it dropped .. :P get thepoint..His Star Campaigns..1. Hamara Bajaj - The scooter was soon on the verge of being outdated and Bajaj neededatleast 2 yrs before it could upgrade its product due to the huge capex and it was needed tohold the sales of bajaj for this time frame.. Turning negatives into positives - the huge bulky frame was ugly to look at but it alsocarried more load, and due to past history, there was this sentimental value to a bajajscooter... it had been in the family for a long time..and was like a family member and hencethe "Hamara Bajaj" positioning a family scooter.2. Liril - They wanted a soap to counter Hamam on the freshness front. What does a middleincome group houswife think about in the 10 mins tht she gets to herself when she is bathing?? and research revealed .. she hums songs..and thinks about escape from the dailydrudgery.. and thts waht the liril ad is supposed to portray.3. KamaSutra Condoms - At that time, they found tht 90% of the people had heard about Nirodhbut only 2% used it, the reason.. they found it repulsive enough to make them forget aboutsex.. and hence KS had the tag line.. "for the pleasure of making love". The Ad councilhauled him for the ad.. his rebuttal .. what do u use condoms for ?? i'm just saying it..ucant punish me for saying what is true...btw why KS ? kamasutra is too long and embarassingto go to a chemist and ask for...so the principle is ... "makeing it desirable is making it buyable"4. Public Service ad... don't drink sugarcane juice from open stalls.. duing the time whenthere was a wide spread fear of an epidemic of jaundice, cholera and dysentry...the ad.. i rem seeing it on tv.. just a glass of juice being made.. a the saying.. "In justRe 1 a glass you can buy jaundice, cholera and dysentry". Only 30 secs ad. No explicitmention of sugarcane n e where, and no "Instructions" about what not to do.. so in hiswords..this is the differnece between propoganda and communication.. propoganda givesinstructions... communicatiom motivates.So branding is about making an impact on the emotional retina of the consumer...

Monday, October 15, 2007

Vocalpoint : P&G initiative on Word of Mouth Marketing


The article discusses about one of famous word-of-mouth marketing initiatives of Procter & Gamble Company (P&G), a leading manufacturer and marketer of consumer products. In 2001, P&G had recruited many teenagers to create buzz about new products through its division Tremor. Subsequently, in December 2005, large scale recruitment for influential moms, also called as Tremor Moms, was started under the new name Vocalpoint. By May 2006, P&G had enlisted 225,000 teenagers in Tremor and another 600,000 moms in Vocalpoint. Analysts opined that this strategy proved to be effective as research showed an increase in sale of products promoted through this network of people.


This explains the importance of word-of-mouth marketing in the promotion of consumer
products; thus using people to market products through wordof- mouth recommendations.


“Marketing is not an event, but a process . . . It has a beginning, a middle, but never an end, for it is a process. You improve it, perfect it, change it, even pause it. But you never stop it completely.”
– Jay Conrad Levinson

Viral Marketing

Hi guys

I recently came to understand the jist of Viral Marketing during my MBA course.

Since Last 3 years, I used to wonder over forward mails I continuously kept on getting. Some were, pure fun and seemed like Amateur work. But at the same time, there used to be lot of clips, which were pure animations. These ad clips seemed to be quite professional and costly too.

I used to ask my friends, that how can a company like Coke and Pepsi afford to let such a costly work to be stolen and sent on net. And the other angel was that these are cuttings of the full ads, which these companies might be showing in other countries.

In total, I couldn’t get the clear cut answer.

But, during MBA in Marketing courses, I came to understand the advertisement focuses mainly on number of impressions the ad creates on the target audience. The companies select many channels simultaneously like TV, radio, hoardings,…..

At the same time, I came to know about WOM or Word of Mouth publicity. It is the best possible publicity any company can aim for. Its more like reference marketing. Here, one of the friends or know person recommends or tells the other person about the product. And this way, it creates a chain reaction. And the information or publicity spreads like a virus. This is the basis of Viral Marketing.

With the onset of Internet, the viral marketing has taken new dimension. Here, most of the people, irrespective of the age and background, circulates any interesting or useful information in the form of forwards mails to their friends. The biggest enabler is huge mail box capacity especially provided by companies like Yahoo and Google.

And the concept is the funnier or more out of the box mail is, more its circulated.

Recently, I worked with one of the company, which wanted me to launch a viral marketing campaign for it. But, the biggest challenge was how to measure its impact.

I haven’t come across any solid method of measuring the impact. But, yes on discussing with few professionals associated with Viral Marketing, one of the method is the number of emails coming back to you from different sources.

You can find the Viral Marketing campaigns by Pepsi and Amul in this post below.
To know more about Viral Marketing one can visit here http://en.wikipedia.org/wiki/Viral_marketing

video

Sunday, October 14, 2007

Business Process

courtesy Anurag Kushwaha
What is a Process?

o A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action.

Characteristics of process

o They have customers (internal or external)

o They cross organizational boundaries


What is a Business Process?

o A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives.

Like – Checking the quality, selling the product, paying to the creditors, hiring employees.
Classification of business process

o Operational process

o Management process

o Cycle process

Operational Process

o Product development

o Customer requirement identification

o Integrated Logistic

o Manufacturing

o Order management

o Sale and service

Management Process

o Process monitoring

o Information management

o Asset management

o Human capital management

o Planning and resource allocation

Cycle process

o Equipment life cycle management

o Human resource life cycle management

o Product life cycle management

o Cash flow management

o Material flow management

Importance of business process

o Standard work procedure

o Standard completion time

o High rate of information flow

o Faster decision making

o High customer satisfaction

Shahrukh Khan-The India's Biggest Brand


Shahrukh Khan-The biggest Indian Brand

This is how the star was described as at the Hindustan Times Leadership Summit. The star has endorsed a number of products and has a perfume by his name too. With a fan following spreading across the world, this brand is indeed resonating.
Expressing his excitement and surprise to be invited at the summit, the man did have his corporate words right coupled with a lot of humor, capturing the interest of the audience. Few of the significant points I could gather from what I saw on television:

India as a global entertainment portal:
He seemed worried about the global positioning of Bollywood in the global environment. He said with an industry so vast and diverse, the Indian industry does not find international filmmakers coming to India, it is always India that has to make its presence felt everywhere. He also commented that Oscars must be conducted in India with him being one of the performers there.

Shahrukh’s Brand Image:
When asked about his brand image and what he has done to create and maintain it, he gave a suttle yet impactful response that it has been his honesty in dealings and unlike other brands ,he competes with himself and not with anybody others. He says he would like his next film to outdo Chak De! India.

Media Invasion:
He said he respected the media and he said that he used media when he had to promote his films like Om Shanti Om currently. He said his movie is competing against Sawariya(he never mentioned the name but it was obvious) where Sony Columbia Tri Star Film is spending 30-40 crores only on publicity.He said that is where I take help of media.

Politics and his entry into it:
He said politics is not for good looking people like him although he said Rahul Gandhi is good looking .On a more serious note, he said that it is commendable that young people are joining politics. And said that it is a self-sacrificing job and he is too materialistic to join it.

Thursday, October 11, 2007

Business Maharajas


By Gita Piramal

Hello friends
I originally wrote this post at www.bookreviewsanddiscussions.blogspot.com and it has been crossposted here.
I came across this book in my second year of engineering. This was the time, when I recently got interested in business and management. So, the name itself enticed me. But, the book was expensive by the measures of any middle class student’s pocket money. So, I waited for three years till I joined the job. And with my first salary, I bought this book. And the investment was worth it. I really enjoyed reading it.

The book is very well researched work of Gita Piramal, who delved into the life histories of Indian Business Tycoons. It covers the life histories of following business houses of India:
  • Dhirubhai Ambani
  • Rahul Bajaj
  • Aditya Birla
  • R.P.Goenka
  • Brijmohan Khaitan
  • Bharat & Vijay Shah
  • Ratan Tata

Though the book focuses on the particular business men, but it covers all the major story of his clan. Every story starts with the family tree. Then it tells, who was the first major businessman of the family like JNT Tata of Tata’s, G D Birla of Birla’s. Also, it tells how each of the family made its fortune like Birla’s made it in trade of opium. Along with the particular family and businessman it gives glimpses of the communities and regions they originated from and worked in like Marwadi’s in the form of Birla’s, Gujarati’s in the form of Ambani’s, Tata’s in the form of Parsi’s ( people who came to India from Persia).


Dhirubhai Ambani

Dhirubhai Ambani belonged to very poor family, but he rose to great heights by his sheer hard work, shrewd conduct and burning ambition. He started his career in Turkey with the Oil Giant, but soon came back to India to start his own business. He started with textiles and reached to information technology. He was the first person to capitalize and demonstrate the power of IPO in India. He was also unpopular for sowing seeds of corruption to the grass root level. But this guy showed the unprecedented pace of success. Now his two sons Mukesh Ambani and Anil Ambani are governing his business. The name of the group is Reliance. It will be really exciting to see the vivid replay of his life in the form of movie ‘Guru’ by Mani Ratnam. More info about Dhirubhai Ambani could be found at http://en.wikipedia.org/wiki/Dhirubhai_Ambani


Rahul Bajaj

Rahul Bajaj, is a legendary entrepreneur, who created the first indigenous models of motorbikes in India. But, he is not first generation entrepreneur. He belongs to Marwadi community. He is known for creating and spearheading the two wheeler market of India via his company Bajaj Auto. The story tells us about the strikes it faced in the days, when Labour & Trade Unions were so strong that they can make or break the ruling party of the state. It also tells us about the Inspector Raj & License Raj era, where the quota was allotted to each and every factory under MRTP act. This was the result of mixed economy model India was following. According to Bajaj, he would have sold the legendary Bajaj Chetak at half the price and with the instant delivery. But, the prices were high and customers had to wait for months to get the delivery. This was because of the government policies.

Initially Bajaj’s collaborated with Piaggio, owned by Agnelli family (owners of Fiat ) of Italy for producing Vespa scooter, which was instant hit. But, after few years due to misunderstanding between both the parties it broke off. And Piaggio collaborated with LML.

To enter motorcycles market and to strengthen it scooter market, Bajaj wooed Honda Motors of Japan. After months of meetings and negotiations Honda chose Munjal’s over Bajaj’s to form Hero Honda (now the biggest two wheeler producer in the world) for making motorcycles and collaborated with Firodia’s to form Kinetic Honda for making scooters. And finally, Bajaj collaborated with Kawasaki for making motorcycles.

With the onset of globalization in 1991, he eyed four wheelers market. He tried to strike a deal with Chrysler, Renault and Fuji. But the closest he could get was in the case of Ashok Leyland, which he finally lost to Hinduja’s.Today he runs his empire with the help of his two sons Rajiv and Sanjiv Bajaj. And bikes Pulsar and Discover are giving the toughest fight to the foreign giants like Honda. I think they know Indian market better than others. In my personal case, I was in dilemma whether to buy Bajaj Pulsar or Honda’s Unicorn. Though Unicorn is smoother and better engineered bike but it lacked the most important thing required to attract Indian youth. ‘The Rugged Feeling’. So I chose Pulsar over Unicorn, and I feel the rush of adrenaline every time I drive it. More info about Rahul Bajaj can be found at http://en.wikipedia.org/wiki/Rahul_Bajaj

In total, this gave me the actual understanding of the works and lifes of businessmen, whom we daily hear about and quote. It also gave me understanding about the dynamics and history of Indian business market. It is one of the two books, which gave me revealed such truths and facts. The other one was ‘India Unbound’ by Gurcharan Das. Above all, it helped me to overcome the fear of reading ‘Economic Times’.

I recommend this book to anybody, who wants to understand the evolution of Indian business during and after independence.

I will add about the other businessman in next few days. Keep reading to get the updates.

Monday, October 1, 2007

Balanced Score Card-An Integrated Management Approach

Hi friends
Very often in every business, whether its SME or MNC the management gets into dilemma what measures to focus at. Is it financials or is it marketing? Then managers especially the top ones, are always in constant hurry to get over with all the report studies. I worked in medium sized company as well as world renowned MNC’s like Philips and GE but it was all same. Higher you move, more load of reports get on you. But, the question is, is it worth that effort? Why can’t be simpler and leaner reporting system? Even lean operations experts find themselves juggling with this scenario. The answer to these problems lies in Balanced Score Card Approach.

What is so special about it?
The name itself suggests, it creates balance. It focuses on four prime perspectives, i.e.
· Financial Perspective-How do we look to our shareholders?
· Customer Perspective-How do customers see us?
· Innovation and learning Perspective- Can we continue to improve and create value?
· Internal Business Perspective-What must we excel at?

The reason is quite simple; all the above perspectives together make the heart of the company. But, at the same time, some are leading indicators while others are lagging indicators. The company can’t have strong financials in the long term, if we are loosing our customer perspective. Also, we will get beaten overnight by some e-commerce company, if we don’t focus on Innovation and Learning perspective. Also, its very important to choose which core competency to develop before you are having sleepless nights, due to impending strategic inflection point.

So, balance card is a tool that creates a balance between all the mentioned four perspectives as well as between long term and short term perspective. Its very easy at times, to have good customer excellence, and screwing your financials, and vice versa. But, business can run only if there is balance.

So, balance card gives us a strategic tool, in which we create metrics which will govern the key perspectives. The metrics can vary from company to company.
The typical metrics are:

Financial Metrics
· ROI
· Growth rate of profit
· EPS

Marketing Perspectives
· Growth rate in sales revenue
· Growth rate of customer base
· Customer Satisfaction rating
· Growth in market share

Internal Business Processes Perspective
· Manufacturing excellence
· Sales Excellence
· Logistics Excellence

Growth and Learning Perspective
· Reduction in New Product Introduction cycle
· Reduction in throughput time
· Reduction in cycle time

Now these metrics act as MIS for top management. And its drilled down at every department and every level to align the actions of everyone in the organization to the objectives of the business.

Further these metrics are supported by the measures, targets, and initiatives in front of each metric. And finally, these metrics enable the whole business activity.
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