Raj's Lab

Strategy and Entrepreneurship

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India’s Youth: Demographic Dividend or Demographic Liability?

In a recent news item I read that India has close to 5 Crores (50 million) youth who are unemployed. Read this article to see this alarming trend: http://economictimes.indiatimes.com/articleshow/37623861.cms  The rate at which we are churning out graduates from our education system, this number will bloat. And this will happen gradually that we won’t notice it, until it happens. Can you imagine what will happen if they simply stay jobless for a few years? Our entire demographic dividend will become a demographic liability. Hence we need to create jobs and at a real fast pace.

Entrepreneurship is really a key tool in this process. Policy makers need to think and apply entrepreneurship in a larger context. Especially from within the educational systems. Most universities in India are still focussed on job creation. With jobs being far and few, this model of education is becoming archaic. We need more discussions on entrepreneurship within campuses. Students need to expose themselves to new trends, new careers, job technologies, etc so that they can explore taking up entrepreneurial initiatives.

It is not necessary that all of them start-up, but they can do things that are different, which can give them interesting jobs, create careers that never existed in the past decade, and may be provide for a few more jobs in their new found space. This approach is essential for society to resolve this ticking time bomb – Youth!

To avoid this time bomb from exploding an turning the much touted dividend and making it a disaster, entrepreneurship should be treated as a socio-economic tool. I am sure this alone will not solve this big challenge, but is going to be a sure tool in heading towards a solution.

Lets all think about this, because while the policy makers come up with a plan, we can do small changes in our own small ways: as parents, as teachers, as friends, as well wishers, as ecosystem players.

A good ecosystem will only enable healthy growth – let’s contribute our part.

Think about it!

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Can Governments afford to pay USD2800 to simply have people stay alive?

How is that for a deal? The base pay for all people should be made USD 2800. Read news here: Base (unconditional) Income for all adults: http://www.reuters.com/article/2013/10/04/us-swiss-pay-idUSBRE9930O620131004 All you have to do is simply live and you will get USD2800. This has been an interesting referendum proposed recently in Switzerland. Why are people asking for such a basic pay? It looks like a challenge not only for people in Switzerland, but all over the world – reducing jobs! Why? I think the problem is automation. With more and more activities being automated and slowly robots taking over most mechanical tasks, too many people have not much to do. At the least, the volume of effort has come down, leading to much needed reduction in labour force. Read this article: Machines will do most of the work: http://www.innovationexcellence.com/blog/2014/06/27/the-coming-workless-future/#sthash.DFY39hP3.uxfs

Increasing competition and economic slowing down has caused many organisations to reduce workforce and invest in technology. Everyone wants cost savings. But is all this sustainable? Only time will tell. But in the near term, will governments be able to bear increasing social security costs? If developed countries have this problem, the bigger problem with developing countries is beyond cash – it is about what to do with the young minds. Can you imagine having millions of energetic youths simply sitting at home spending time playing games, tweeting, and FB’ing friends? Sadly that’s beginning to happen. Where’s the end?

Its time policy makers start thinking! Enabling entrepreneurial living and teaching people the spirit behind this is probably the only hope!

Think about it!


Reliance Industries to enter media business

The biggest deal so far in the Indian media industry. But it is another small part of the conglomerate called Reliance Industries. Why is there so much of a mixed opinion with the recent acquisition of Network18 Media by Reliance? While there seem to be many reasons to be worried about media independence, it also seems stretched. Here is a link giving reasons why media independence may die: http://www.forbes.com/sites/meghabahree/2014/05/30/reliance-takes-over-network18-is-this-the-death-of-media-independence/

Reliance has a heavy balance sheet, heavy with cash. Hence it is a big responsibility of its management to constantly seek new opportunities. Mukesh Ambani is known to be a very entrepreneurial businessman, trained personally by his dad, the legendary Indian Entrepreneur, Shri Dhirubhai Ambani. With the acquisition of the potential to launch 4G services across India (a few years ago), it was quite imminent that Reliance will need some solid content strategy. With data services expected to explode over the next decade, they have positioned themselves for this ride. So, in many ways it also seems like a interesting strategic fit for the company to have identified and picked up Network18. Here is another story showing how this deal happened: http://www.medianama.com/2014/05/223-how-reliance-industries-acquired-network18-a-detailed-timeline-of-events/

Reliance has had a competitive advantage – the ability to conceive of and implement large scale strategic projects on-time and within-costs. This makes the new 4G rollout best placed in their hands. While this will propel the data services industry to grow leaps and bounds, make people across India gain the power of information on their handsets, will it restrict the media to not speak its mind – only time will tell. But one thing that consumers can look forward to, is competitive rates for data usage in a market that seems to be exploiting consumers of information on their mobile sets. Reliance did that earlier with the launch of the mobile phone schemes; will they do it with the data revolution that is just about beginning?

Read, think and watch for only time will tell. But with more speed and possibly at a lower cost, people will be able to consume a lot more information and a lot more easily. Won’t that open up a lot more opportunities for entrepreneurs in the digital space?

Think about it!

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Do MOOCs upend traditional business education?

MOOC (Massive Open Online Course) – http://en.wikipedia.org/wiki/Massive_open_online_course

Are MOOCs scaring traditional models of business education? Though the number of people enrolling for these courses seem to be on the rise, the number actually completing and gaining a certificate seem to be a let down – 3% – 5%. Here is a study that talks about this and some rather surprising trends on how MOOC’s are faring and how they may impact traditional education. Link: http://knowledge.wharton.upenn.edu/article/moocs-upend-traditional-business-education/

There are important lessons from the study for both receivers and providers of online content. It doesn’t seem like pricing for certification with the content delivered free has been a very interesting revenue model so far. But it is also important to not miss the fact that the volumes may over time justify the revenues, especially the margins.

It also looks like MOOC’s if used well could bring to business schools a fresh set of students who may add diversity to a good program. It will bring improved class discussions, perspectives, as well as greater markets to business schools. Hence it does seem a worthy experiment for most business schools to offer some form of MOOC or online courses, that students can take prior to choosing a business school. It seems like a real differentiator!

While there are no final words out on the matter of whether people would prefer to stay at home or continue in their jobs and take courses online to complete higher education – but assuming that this will be the future, seems far fetched! At least in the current context, especially in a developing country context.

It doesn’t seem like MOOC’s will replace traditional business schools in developing countries for a long time. But will B Schools use these channels as sources of drawing in more students, creating more markets for themselves is something worth watching as a trend.

Think about it!

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Apple buys Beats – why?

Apple has iTunes Radio, but it has not kept pace with services such as Spotify and Pandora. Should Apple have re-built iTunes Radio instead of buying out Beats? This is a question only time can answer, but for now there are a lot of things that can be read from the acquisition.

Apple started its foray into the consumer electronics business with music and it knows that music is an important aspect of their future business as well. Hence music is going to be an important component of Apple’s strategy. Here are two articles discussing the acquisition:

How the deal almost got cancelled? http://www.fastcompany.com/3031194/most-innovative-companies/apple-buys-beats-electronics-for-3-billion

Interview with Wharton Professor Peter Fader: http://knowledge.wharton.upenn.edu/article/apples-beats-buy-desperation-opportunity/

But some interesting insights from the acquisition are:

  • Apple has generally bought really small start-ups (well before they became large brands)
  • Apple’s acquisitions have been low key affairs and so it is this time around too
  • Apple usually builds the best products / services itself, but accepting that someone else has got it right is a rare instance; it is a rarity or a change in strategy to keep up with the changing times!
  • The hardware part of the Beat’s Business seems like a good fit with Apple’s positioning of its products, as it is unique, stylish and premium positioned
  • The software part of the business is not the largest in the space, but seems to be in line with the general trend; will the acquisition give it the chance to scale?
  • More than the valuation paid for the purchase, the act of purchasing a company to strengthen its services seems to be a new trend (I think it started with maps)
  • Is Apple keeping pace with change – by not attempting to make everything itself in an open innovation world?

Will Apple open itself up as part of its growth strategy? Will Apple’s entry into the music streaming space bolster the trend away from music downloads? All these are interesting for all those who admire and watch the brand called ‘Apple’. But for now, I think what most fans of Apple want is a larger screen iPhone? While we all speculate on what Apple should do next, the best thing about Apple (historically) has been that it leaves everyone wondering: What will Apple do next?


3 C’s of Customer Satisfaction

I spend a large portion of my time with entrepreneurial enterprises, start-ups and entrepreneurs. Even last saturday I was with about 40 entrepreneurs at Bangalore and the question of how to build trust and how to build a brand kept coming up. Even though many people make suggestions, the truth is that for a young company, division or brand, only one thing can help build trust – being consistent.

So, when I saw this article, I loved it instantaneously! How is it that the truth always seems so simple that we miss it? Read the article here: http://www.mckinsey.com/Insights/Consumer_And_Retail/The_three_Cs_of_customer_satisfaction_Consistency_consistency_consistency

What can start-ups learn from this survey results?

  • Consistency is key to customer satisfaction
  • Consistency can be built only if we know the customer journey with the company / product
  • Consistency in experience at different points in the customer journey can lead to building trust
  • Consistency can be easily incorporated in communication
  • Consistency is about showing up
  • Consistency means making promises and keeping promises

Consistency is an important tool for entrepreneurs to build a brand for their start-ups. Entrepreneurs must make promises and deliver on those promises. If start-ups do this consistently, they are bound to build trust amongst their early customers. As more people experience this trust, they all start associating the product / service with the start-up. This leads to brand creation.

“Consistency” is hence key to a start-up’s growth journey, both for revenue growth as well as for brand creation.

Three C’s of Customer Satisfaction: Consistency, Consistency, Consistency!

Have you built consistency into your start-up and/or yourself? Start it today! Someone is watching!

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Goals should shape Plans

Isn’t that so obvious? But so many people attempt planning without first fixing a non moving goal. The reason they give themselves is that in today’s fast changing world, they need to be dynamic. This is actually a justification, not reasoning. This misunderstanding is why plans don’t serve their intended purpose and planning takes the blame for non-performance.

Setting goals is a difficult job. This is because we should first be sure about what we want in life. It requires us to let go of conflicting goals, give up some that will become distractions along the way and be convinced that the set goal is what we will be happy reaching. That the set goal is what will inspire us every time we face obstacles. That the set goal will keep us on the path when attractive alternatives present themselves as fresh opportunities during the journey.

While we should not close our eyes to fresh opportunities, keeping them logged till the next review of our plan is the right action. Constantly changing goals simply means, effort does not add up, momentum does not build up, and inspiration does not stay alive for long.

So every time you sit to make plans, be it for the start-up or for a function (example: marketing) be sure you first fix your goals. As an entrepreneur it is important to build this discipline – the discipline of setting goals before making plans.

If one does not do this, all plans will becomes useless too soon, and you (along with you team) will start finding planning a totally purposeless activity. But this is not good for the enterprise / organisation over the long term.

Think about it!


Why did Flipkart buy / merge with Myntra?

Why would Flipkart buy or merge Myntra with itself? Will it be simply to consolidate themselves? Isn’t the e-commerce industry in India too young to actually tend towards consolidation? Isn’t the space to see a lot more upstarts before any form of consolidation begins? Just questions to ponder!

Five reasons to kickstart a discussion, reflect and learn:

  1. Flipkart wants to strengthen its fashion offerings: It makes a lot of sense for Flipkart to buy an existing player in the market for adding the fast growing fashion segment. Instead of starting a fresh and fighting a strong growing incumbent, just buy up the strongest player in the market and seek scale.
  2. Myntra recognizes that single category e-tailers can’t survive long: This has been a long pending debate with both sides having candidates succeeding and failing. But the general advice is that it makes sense to have a bunch of categories than a single category when it comes to online retailing, though the verdict is anywhere from being made.
  3. Flipkart and Myntra both want to grow inorganically: Both are run by entrepreneurs seeking growth. They are ambitious and know fully well that they require a stronger management team to grow their individual units. If merging gives scale to both players, a chance of getting to the next level of the game, it also gives access to better quality funding, human resources, etc.,. M&A is seen as a common inorganic growth strategy.
  4. The investors behind the ventures think its time for increasing valuations: If three key investors behind each of the two ventures are common, they would like to consolidate their holdings and safeguard their valuations (and investments). Keeping their investments consolidated gives the investors some hold on the firm as well as some security if something goes wrong. It can be like the investors consolidating their portfolio – isn’t it?
  5. Three is better than Two (Bansals) and all from IIT: Does it not make sense to increase the management team without diluting the widely referred to tag ‘Bansal Brothers’? Flipkart can be continued to be called as run by ‘Bansal Brothers’ even after the Myntra acquisition. They can also continue to be called as an entrepreneurial firm run by IIT Alumni. Isn’t that a good reason for the merger / purchase?

I am sure that there are many reasons and we will never know the real reasons. The real reasons will only be known to the founders (three Bansals) and the investors behind them. Whether this purchase / merger will be for the overall good of the merged entity, will be answered only by time; but for now it seems all good for both Flipkart and Myntra.

Irrespective of the success of the merger or purchase, the stories of Flipkart and Myntra are encouraging and inspiring for aspiring entrepreneurs in India. They can now look up to young Indians who have struck it big. This should inspire a lot more Indians to try their hands at entrepreneurship.

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Is Japan shrinking and greying at the same time?

I am a fan of Japan ever since I visited the country. The land, the people, the culture, the silence, their practices, their history and their management practices – everything about them is interesting. I have been a student of Japan and read up everything I come across about this beautiful country. But this article based on a recent data from the National Institute of Population and Social Security Research seems worrying. Here is the link to the detailed article: http://knowledge.wharton.upenn.edu/article/graying-japan-tough-choices-population-dilemma/

The two big challenges facing the Japanese society are:

  1. Ageing population: While everyone hails that the average Japanese and his / her longevity, it is becoming a real challenge to the government’s social security cost. The average Japanese live long and live healthy, but they become less productive because of so many factors including changes in the way business is conducted, the changes to technology, etc. But the cost of maintaining the minimum lifestyle is really becoming difficult because of the reduced income to the government coffers and this is due to the second challenge.
  2. Shrinking population: While policies and lifestyle are equally to be blamed for the reducing workforce (working population), it is now beginning to tend towards a large scale challenge for the Japanese economy. If the government and the socially responsible leaders of the society don’t come together and make changes, the society over the next 20 – 50 years may look very challenging. The population will continue to shrink and it in turn will reduce the number of people available for jobs, which eventually reduces the income accruing to the government. The government income is needed to take care of the fast growing population of aged (retired) people.

This two-pronged challenge needs to be handled strategically by the leaders and everyone responsible for the country’s future. But it is highly possible that Japan can take those calls and make the change happen. It has a history where people have lived for national causes and sacrificed a lot for national causes. I am fairly sure that Japan can find a solution to its slow but upcoming social challenge. But a challenge of this scale requires a diplomatic, charismatic and courageous leader, who can make such a large scale change happen. Will he / she show themselves in time? Only time will tell.

But there are lessons other countries can learn from this even before the challenge starts forming – but are they?

Lets think about it!


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