What drives your enterprise?

Every entrepreneur starts because of a heartfelt need to solve some problem or overcome some challenge. But over time as the business grows this original intent is lost. This leads to stagnation or sometimes growth that brings profits but not satisfaction. What makes this change happen? Where does this dissatisfaction arise from?

It looks like the answer to that question rests in answering another question: “What’s driving your enterprise?”

If the purpose is strong enough the entrepreneur and the growing entrepreneurial team continue to keep their focus on the purpose and this inspires them to wade through problems and setbacks equally as successes and achievements. But if purpose takes a back seat to allow profits lead the way, then the inspiration is lost unconsciously. This leads to lot of compromises and eventually stagnation of some kind – either at the individual level or at the enterprise level. This has resulted in a lot of promising enterprises wither away far earlier than realizing their true potential.

Whenever you run any entrepreneurial initiative, always keep checking what gives your satisfaction? Always ask yourself the question – “What made you get started?” Ensure the answer is the purpose itself and don’t let a measure come in the way as the driving force. There is nothing wrong with profits, but profits are only a measure of passing performance. Let them not become the driving force behind the actions of the enterprise – they are bound to show some short term gains but reduce the journey itself over time.

So what’s driving your enterprise: purpose or profits?

Think about it!

Small Business and Developmental Investments

Every progressive individual knows the importance of making futuristic investments. But when it comes to business most entrepreneurs rarely invest in themselves and their people as much as they make investments into machinery and technology. The primary reason being the latter is more tangible than the former. But aren’t entrepreneurs the right people to prepare for the future? Is it sensible to run a business with under prepared resources? Why is it so difficult for entrepreneurs to make developmental investments? Why do they find it difficult to make investments into strategy and planning, learning and development, and research and development?

I am not sure if entrepreneurs really spend time strategizing their growth plans regularly. If you are one of those who do sharpen your axe every year (if not more frequently) then as part of the exercise also look at what investments you would love to make this year towards developmental initiatives. The quantum is less significant than the intent. While spending money seems to be the primary stumbling block in making these decisions – ideally they should not be! Why? Because typically in every enterprise there is already a lot of resources deployed but not used! Surprised, here is a quick example: An entrepreneur incubated at any reasonable university campus typically has access to faculty, classes, library, and workshops. Have you attended any of these? Have you nominated any of your people to attend these and bring some value back to your enterprise? Does that require any money at all? In most cases it doesn’t and even if you have to spend some money it is too little to warrant even a discussion – then why is it that entrepreneurs don’t push themselves or their team members towards development? It is primarily because of a lack of understanding, rather than all the reasons being voiced. First get the intent right – then the decisions will be much easier to make. In some cases when the enterprise has grown bigger, one may be required to hire a coach or a mentor for the CEO or the senior management team – even this investment if rightly channeled will lead to improved leadership.

Hence this year please look at what initiatives you and your team will take to develop yourselves into a much stronger team so as to use the engine you have developed and fine tune it into a much more capable vehicle so that you can take it to greater heights. I have met a few forward looking CEOs and they focus on this area as an important aspect of their growth strategy. Their advice is strictly never to measure these investments in the short term. But that does not do away measuring them. They have to be done right so as to derive the relevant benefits.

So what are you investing in this year?

Think about it!

Knowledge Worker Community: Is it Over Managed & Under Led?

Thanks to management thinkers such as Peter Drucker, Thomas Davenport amongst others, the concept of Knowledge Worker has definitely become clear. This understanding has led to number of studies showing increased interest in understanding the nuances of managing knowledge workers, the change from blue-collar worker management to while-collar worker management to knowledge worker management! But what we have lost rather may have lost is that – it is only resources which can be managed, not people! The whole idea of human being as a resource needs thinking – because then we may actually start trying to lead rather than to manage.

Managing and Leading are two activities with different objectives requiring their individual practitioners almost conflicting characteristics. Just think! Hence if we subscribe to the view that human beings especially knowledge workers are not plain resources available to institutions and society at large then we need more thinking – Should they be managed or led? Can they be shown the way and let to manage themselves? Should they then be trained / tutored / mentored on understanding contribution over commitment?

The very idea of knowledge workers indicates people who are willing to do the thinking and identify what is best for the accomplishment of an activity. This being the case will it make sense to tell them this is the way ahead or will it make better sense to let them know where we want to go and allow them to contribute in reaching there. There is also a very important second thought to this – the idea of contributing. When a person believes in a cause and contributes to it – he / she gives more into the goal at hand than treating that as an activity imposed by a superior. Since many organizational practices still are incremental improvements over the industrial age habits – and the workers have shifted from blue-collar thinking to knowledge-worker mindset, it is resulting in a friction. Many of us also experience this while leading or being led!

Every leader of repute wants to have more passionate people walk-in to work everyday. If we need to really start seeing passion-filled people walking into glass building everyday it is important to understand the nature of this change. We need to accept, acknowledge and incorporate new techniques, processes to enable knowledge workers to identify and align themselves to what they like to do. Since this requires a certain level of convincing the heart more than the mind, this may not be possible too easily for managers – it may be in the realm of true leaders to make this transition!

Commoditized Knowledge Companies – Future?

If you are an entrepreneur interested in entering the knowledge business or a leader of a small business in the IT / ITES space, take the quick check test below:

  • Can you spell out your Unique Selling Proposition?
  • Is it necessary to be differentiated?
  • Have you spent time identifying your differentiators?
  • What are you doing to create a brand around your organization?
  • In the coming year what is your plan for increasing brand value?

How many of you felt this set simply does not apply to you as you do not require branding? We specially request all of you who feel this way to read on…

The IT and IT enabled sector has been getting a lot of attention in India over the last decade. We have seen number of companies mushroom, some have grown into billion dollar businesses and others have nearly disappeared from the scene. All in some form have taken a pie from the opportunity. While the initial players raked fortunes because of the first mover advantage and strong leadership, many of today’s small and medium enterprises have got stuck in what is typically called “No man’s land” or “Stuck in the middle” syndrome. They struck an opportunity, but did not do anything more than that. They did not spend time looking for the next game – they focused on improving productivity over identifying opportunity.

IT and ITES should have been a knowledge based industry where in expertise and value-add should have emerged as key distinguisher’s. But today the playground resembles more of commoditized market, where it is predominantly price and throughput that are determinants. This is something that is coming out strongly in our interaction with the industry. Most of the leaders pride in service quality which is associated with “giving more at less cost” or “ability to engage with customers in a more intense manner” (which actually translates to saying “YES” to everything that is being asked by the customer).

If these are the two aspects that 90% of the industry is quoting albeit in different lingo as their differentiator – then can they truly be differentiators? In our attempt to blindly race on price and time we have created today an undifferentiated market. If the choice of an organization is to be more inclined towards the commodity market – there is no need for seeking differentiators. But growing is always difficult in an undifferentiated market.

While the industry was working on providing the customer the price advantage, “low-cost service” has become a standard expectation. The customer today wants to see something more from their IT partners. There has always been an inclination for human beings to seek/reach as far up the value chain as possible and the knowledge economy is really testing the height of this value chain. Customers today are expecting “Solution specialists”, “Expert Business Understanding” and “Business Enablers” from their partners. The customers are also willing today to pay a premium if they see “Value”. The customer today is redefining the parameters of the game.

If you agree with the above, can you afford to be operating in the dynamics of an “undifferentiated market”? Do we really have a choice today? We strongly feel only those organization that buck up on creating meaningful differentiators – that are seen as “value add” by customers, will grow in the coming years. Organizations which take a call to move on “increasing internal efficiency” and “cost advantage” would soon find themselves more and more stuck

The low entry barrier for IT and ITES is making the market increasingly crowded. Coupled to this is the “buzz” of the giants in the industry seeking methods now to move up the value chain. Both these factors are also influencing the rules of the game. And if you are not familiar with the new rules – you may soon find it difficult to be in the game.

How much talk is being done around value chain –  lots and More! But are we doing something about it – very LESS! During our recent meetings with leaders of small and medium organizations in the knowledge space, it is becoming apparent that they are in no urgency to seek differentiation or build brands. Every one seemingly stumbles when it comes to defining high-end, value added services.

The most often quoted reason for not seeking to build differentiation or brand is the associated price. However one cannot help wondering, could the actual reason be the dreaded “comfort zone syndrome”? The feeling of one doing “reasonably well” today without indulging in differentiated services – is this stopping us from being prepared when the tide turns?

Who thinks you’re different?

Is that an important question to answer? Absolutely! Most entrepreneurs think they are different, their products are different, their solutions are different, their services are different and everything about their business is different. In fact, if you listen to them you will wonder how they even think so. Quite obviously many of them will seem extremely similar to what’s available or just a slightly modified version of the existing option. This leads us to the question – “Who thinks you are different?”

Does the potential customer think so?

If the customer doesn’t think you are different or unique or original – then it doesn’t really matter what the entrepreneur thinks! It is essential that the entrepreneur understands this and seeks out the potential client audience every time he / she thinks they have something unique, to validate the uniqueness. If the potential audience you speak to does not seem to express this opinion, then it doesn’t matter what, the entrepreneur needs to go back to the drawing board.

Re-think the product! Re-think the service! Re-think the value! Re-think the solution! Re-think the communication! Re-think the delivery! Re-think the relationship! Re-think the price!

Fundamentally re-think! And again go back to the audience – ask them once more! Continue this approach till the potential client group whose problem / challenge you are trying to address tell you that you or your offering is different. Once you make this happen, you have the great opportunity to be a successful enterprise.

“Who thinks you’re different?” It matters – and it’s a significant aspect of business that needs repeated validation.

Think about it!

Entrepreneurs and Sales

“Why Sell?” – Never ask this question! Right from the time you are born you have done that. While all of us acknowledge that as an obvious happening in hindsight – when it comes to our start-ups, most entrepreneurs refrain from selling. They get creative with the reasons why they should not sell!

Why sell’? Because ’ Sales’ is the life blood of an enterprise.

No sales => No revenue => No cash => No business

Still it is rather surprising that entrepreneurs don’t create a disciplined sales process in a start-up. There is a lot of effort on branding, marketing, public relations, human resource, quality assurance, etc but not sales. Somehow ‘sales’ always gets missed out. This is true across industries without exception. In most cases the entrepreneur does some random sales activities, but since it is not a sustained and planned effort, there is no momentum being built in the venture. There is no adding on to existing work. It is always a part time activity that is put the back burner once the plate is full.

In fact every start-up must ensure that it sells every day or at least attempts to make a sale every day. ‘Sales’ requires discipline, perseverance, conviction and patience. It is actually a great way to help potential clients solve their challenges / problems with the products and services that you have on offer.

The next time when entrepreneurs ask ‘why sell’; ask them if they have an alternate solution to make sales happen. It is very important that entrepreneurs don’t keep raising alternate forms of capital to stay alive. The earlier a start-up begins to receive sales revenue, the better the chances of success. So where is the doubt? Start selling now! The question to really ponder is – ‘is there a unique way to make sales happen without selling?’

Think about it!

How many clients did you speak to this week?

I love asking my clients this question. In most cases for all the talk about growth, strategy, customer intimacy, customer relationship, marketing, and service, most entrepreneurs don’t speak to customers at all. In fact many avoid it till it becomes absolutely essential. The question I get asked is – what is there to speak? It sends me in a tail spin before I gather myself and ask them again: How many customers would you like to be speaking to this week? They give numbers – 10 / 20 / 200 – mostly random numbers – but what’s wrong! Everything started with somebody’s dream – isn’t it?

The importance of meeting customers (both existing and potential) is an important activity for the CEO of a company. It requires the entrepreneur in our case (since we deal with small and medium entrepreneurs) to step outside the office or be on skype / gtalk / hangout / video conferencing (if customers are not geographically reachable) at least 50% of the time. This is because, based on my experience companies where the CEO / Entrepreneur / Owner spends half of their time meeting customers, the businesses seem to be doing better than most others.

Especially scientists / technologists / researchers who are looking to commercialize their creations should learn to do this more often. These people spend inordinate amount of time at their offices and labs and keep wondering why customers don’t seem to be buy such an obviously relevant and useful product? Assumptions, especially about customers, are a big mistake that entrepreneurs make – in fact I think we should call it a sin!

So, don’t wait for us to meet so that I can ask you this question – ask it of yourself! Even if you are an individual this same question applies. Ask and ensure you spend enough time (at least 50%) interfacing with your customers. It will change the way your business (individually and as an enterprise) responds.

Think about it!

Losing entrepreneurs to the Perennial Dilemma

Where we lose our entrepreneurs? Here: I want to be a product company! But I will start as a services company for now and fund my product creation! Soon my product will be ready and then i will focus on selling my product and move from a services company to be a full-fledged product company.

How many times have you heard this from entrepreneurs? I soak myself up in the start-up ecosystem quite a bit and so I get to hear this quite often. When I detest this thinking as ‘lack of focus’ – many entrepreneurs aggressively raise questions if this approach is totally wrong? In my recent workshop at Kolkata we had this discussion again, especially because we were discussing ‘Go to Market’.

Nothing is absolutely right or wrong, but many decisions can lead you down one of the paths.

Most entrepreneurs get caught up in the above thinking, which by itself is not wrong totally. Why not do what you know and quickly raise cash for building the dream product? The trouble is not at the start of this thought process, but somewhere along the way. Most often in a few years the above route produces enough cash flow and makes the entrepreneur think that services is an interesting business and it should be a division by itself. They invest in many activities like setting up an office, building a marketing force for services, creating P&L responsibilities for it and still keep the product initiative going, albeit at a reduced momentum. Soon the product takes the back seat as a paying customer is not going to keep quite. The entrepreneur being one who loves taking on challenges gets fully involved in growing the services business and eventually loses focus on the product. At some point in time the goal moves from creating the best product to creating a large profitable company! This is the place we lose the battle.

If you do decide to take the above route here is my advice:

  • Ensure enough checks to ensure services income is being used only for product development.
  • Ensure no extra services business is being taken-on beyond what is needed to keep the product development funded.
  • Ensure there is enough wise counsel to stop you in case you are over stepping towards quick money and compromising on the long term bounty.

It’s not an impossible route, but one needs to be extremely focused and avoid distractions. We need more companies that grow on purpose and for that we need mentors / coaches who will ensure they help their CEO’s keep focus. I enjoy doing this with my entrepreneurial CEO’s, especially because they are early stage high growth ventures where distractions are too many. Hope to see many of them blossom!

Did You Revisit Your Strategy?

The rupee is tumbling. Trade deficits are widening. There is a greaterstrategy call for local protection through trade barriers and other softer controls. Cash flow remains a concern. Raising money (quality money) is getting tougher. Long term research and development, organization development and strategic initiatives are all being shelved and postponed.  While many of these responses have been tactical efforts to handle the short term pressure and medium term impact on surviving the turbulence, most enterprises atleast the emerging ones and small businesses don’t seem to have revisited their strategies. Strategy is a tool that helps a company aspire correctly, reassess the context, align resources and enables the company thrive.  While strategy is not making documents, it is definitely not dreaming either. It is about making choices within the context in which the business operates. As the context changes the strategy needs revisit.

During the last few months, most of my speaking requests from corporate as well as industry associations have been on the topic of growth and strategy. But the number of people who turn up for strategy related talk with interest and belief are very few.  However with those who turn up, I have been having very interesting discussions and thought share. A handful of CEOs and entrepreneurs of emerging businesses are slowly beginning to understand what strategy is and how to utilize it to make their organizations healthier and perform better. This is a slow but a welcome change!

As I head out today to one more institution to kick start their strategy process, I am excited at the possibility  of moving one more organization beyond their self imposed boundaries. After all turbulence creates an equal number of opportunities for entrepreneurs to leverage.

Landmark Sale 2013

I did not make as many trips to the landmark sale this year as I would have usually done. Being a bibliophile and a voraciouslandmark-sale reader, I used to find the landmark sale exciting for multiple reasons. The first one is the pleasure of being in the midst of so many books. It was also a chance to get books that don’t normally make themselves visible during normal days.  Rare titles, collectibles and highly discounted costly books are easy to find in this sale.  But this year I found the sale not so exciting- atleast not in books.  I found very less titles, and not many of them deeply discounted.  Infact some of the books were cheaper in the online stores, even after the discount offered by the store as a part of its sales. Is this an indicator of a larger trend in the offing?

Are large bookstores, becoming a thing of the past? Is the book retailing business holding on to an already disrupted model? Is it time for the book retailing business to see some serious business model innovation?

I would always want physical book stores to exist. Landmark has always been a much loved bookstore for me. I hope to see Landmark and many other bookstores find innovative ways to thrive in today’s competitive markets.  I hope the 2014 sales will be more exciting. Book stores as a business, needs a makeover Will landmark lead the pack?