For the last coupla weeks or so, there has been intense, mind you, very intense speculation on what Manmohanji meant when he addressed the CII conference with a 10 point agenda. The debate hasn't stopped yet. I was seriously pissed off when I saw two noted columnists(Swaminathan Aiyer and Shobaa De) in the today's Sunday Times voicing their concerns on this issue after weeks of intense debates. Both of the columnists, for whom I have very high regards, have addressed this issue pretty lopsidedly(Nevertheless,the two articles were good and Iyer was spot on in his 10 point agenda to the netas). You can play the blame game upon politicians for social inequality and also ask politicians to restrain themselves before advising the corporates. Certainly any logic driven person would agree with this. 100 % true.
And as a matter of fact PM was addressing a bunch of corporates and not politicians and obviously he can't speak of the restraint in political spending(man, he can't comment on politicians b'coz he has very limited powers in the UPA regime and he's trying to use it for the betterment of the country) and by the way personally Dr Manmohan Singh is known for his modesty and simple lifestyle.
But the question is was Manmohanji spoke something so bad that it has evoked such a response from all quarters?
1 Manmohanji was asked to address the CII conference, which in the first place, was held to discuss the 'inclusive growth' which addresses how should all the people in the country grow? Growth in our country as all of us know is specific to a few sectors. When 6/10 households in our beloved country do not have water in their premises and 1/2 households in rural India, ie the villages don't have electricity, inclusive growth is certainly the most important issue
2 Most of us know that Manmohanji was one of the few people, who have made India, one of the fastest growing economies in the world. He has certainly created the opportunities for a lot of people to become the CEOs of various corporate organisations in India. It is only because of liberalisation that a lot of middle class 21 yr kids today find absolutely no hassles in finding themselves cushy jobs.
3 I'm not talking about the past glories. Think from Manmohanji's perspective. He has certainly pushed India into the high growth trajectory, elevating the status of a lot of middle class Indians, by his liberalisation move. Next thing in his mind should be to elevate the poor class. And that's obviously on the top of his mind. And that's what is achieved by inclusive growth.
4 It was the CII which invited him to address the issue of Inclusive growth and as a world class economist, he came out with his views. The issue of 'conspicuous consumption' and 'Cap on CEO salaries' was just a small part of his entire presentation and not the crux. Don't view him as a prime minister who's addressed the conference. View him as an economist and he's certainly capable of addressing any international conference on such topics even if he were not India's PM, but as one of the best economists living on this planet.
Content of the speech: Flawed?
Let me just get into the crux.
1 A lot of people fail to understand that being a business leader doesn't always mean that one can be a good economist. A country can't be viewed as a firm as such. Business leaders may be good at managing firms but macroeconomics is something different. But no one can deny the effect of macroeconomics on a firm run by a CEO. To put it in simple terms, concept of firm and microeconomics is an open system concept whereas macroeconomics is a closed system.
2 Any macroeconomics expert should have a very very sound understanding of social behavior pattern, political philosophy, moral philosophy, political history and a bit of law. Take Dr. Amartya Sen as an example. He's a Nobel Prize awardee in economics, but he's got a very sound understanding of not only economics but also of all the above mentioned subjects.
3 The study of macroeconomics is complete only if one has a very good understanding of Social behavior pattern and other such subjects mentioned above. But Business specialists who typically run the firms do not need to have such a level of expertise, just a basic understanding is sufficient. The logic is not difficult to decipher: Running a firm depends on macroeconomics and macroeconomics in turn depends on social behavior pattern. So macro economists have to go a level deeper.
4 When there is a growing inequality, there is a social tension and if it breaks out bigger, all of us are gonna lose in the long run. And the advent of media has made events like Abhi-Ash wedding very public just for their TRP. This is just an example. Many such programmes and sops which portray luxury, reach the nook and corner of the country. Just think this way. A small boy in the village sees the TV and regrets the fact that he can't wear good clothing or eat good food. So definitely it'll affect his mind and to make the matters worse media telecast programmes without minding the social impacts. We or for that matter even biz-specialists can't appreciate well, what would happen if a boy watches luxury stuffs and how his mind gets affected. But a person who's good at political and moral philosophy, historic behavior pattern et all can appreciate it well because he'd have read about revolts and what lead to the revolt, the economic impacts of the revolt and how firms were affected by it. So obviously this is a critical issue today and that's what Dr. Singh wanted to address.
5 Coming to the next issue of salaries,Cap on CEO salaries may be not the proper way of putting it. But the point he wanted to make is that the salary levels of all the employees, not only the CEOs, are rising too much when compared to that of the poor people. The gap between the rich and the poor is increasing and something must be done about it. You may ask me why he was very specific about CEO salaries. You might even say that it has political motive. But the same issue of CEO salaries is discussed worldwide including the US, so prolly he referred to the wording -'Cap on CEO salaries' which was an issue in the US,as merely a pointer to drive home his point of how the income disparity is a serious issue worldwide. He prolly wouldn't have meant it.
See we need to address this issue immediately. Only then we can achieve sustainable growth. The rich poor gap is becoming alarmingly wide. And corporates have definitely a greater responsibility in the remedy measures. Not because they are generous, but it is necessary for them in the long run to survive. In other words we call it 'Long Run Profit maximising behavior'!! Perhaps this is why Adam Smith is really fantabulous!!
So let the distinguished columnists like Swaminathan SA Iyer in their columns (his column 'Swaminomics' appears every Sunday in Times of India) , discuss the solutions for bridging this divide rather than criticizing and mocking the PM.
Above all just think about the pains to prepare agendas to address a CII conference. And we stick to a small aspect of it and criticize. Can your regional neta address such a conference? I know for sure that the malaichamys and muthukaruppus of my state don't know what inclusive growth is or prolly what's the growth rate of India is. But come on, they know how to prepare a cuppa Masala Tea.
Monday, June 11, 2007
Sunday, June 10, 2007
'Pull' Strategy - (Management is not rocket science!)
In my previous post I had written about my biz plan. That was a perfect example of a 'pull system' strategy (which I realised later). In this post I'll try to explain pull system strategy.
Any company requires resources. If the resources are pushed into the system, we call it a push system. Most companies follow this kind of a push approach where they would predict the demand and stack up their inventory by pushing the resources onto it. It has been a very successful model till date. This is a structured approach. A good example of this push system is the biz model of the Walmart's apparel division. Walmart always looks up to standardising its apparels supplier. Walmart generally abstains itself from dealing with multiple suppliers when it comes to apparels business. But as a matter of fact Walmart has not been very successful in this apparels segment.
Ideally in the current market scenario,Walmart should try to 'pull' in from different suppliers who would have their own unique style of apparel design. Managing your supply chain becomes a lil difficult but still the benefits over weigh your costs. This is what I mean by the pull strategy. You don't push your stocks from a single supplier alone but you pull different resources from different suppliers
It's not the story of the Walmart alone. There are very good examples of companies which have thrived well by adopting this strategy. Amazon.com is one beautiful example. You can buy any book you would like to read on the face of this earth. Amazon.com pulls is from a lot of suppliers.
Another case is our own baazee.com, now ebay.in, which is a very fitting example where you enable p2p selling. Even traditional p2p websites like limewire adopt this pull strategy. e-choupals of ITC is also a wonderful example.
What we do when we blog? We pull in knowledge from various resources and present it for others to easily appreciate. To put it in a better way, corporates are now resorting to corporate-blogging where ideas are pulled in from all the employees.
Lean manufacturing system focused on eliminating wastes or making the inventory management better. You did not push in your inventory. Rather you pulled in when there was a demand. This was probably the first instance of pull systems, tho' I'm not very sure of it.
See I'm not trying to undermine the push systems which have been erstwhile very successful. But in this changing market dynamics, pull systems have evolved well and would definitely rule the roost in the near future. This is not tough to comprehend. What happens when you earn far more than the amount you can afford to spend in buying the costliest car in this earth? You would like to order a car which is specially manufactured for you with your own preferences. So the manufacturer can no longer push his inventory. He has to cater to certain special orders like that of yours. If there are 100 people like you, who'd ask the Mercedes to manufacture customised cars think what would happen? What if there are 10000? Slowly we see that the car manufacturer who was pushing his standardised raw materials into his inventory can't do so anymore. There are people who order special cars and the number of such people keeps changing. So he has to alter his quantitative as well as strategic modelling of his supply chain. This is what we mean by the pull strategy. This may be a hypothetical example, but this is how the world's buying behavior is evolving. We have strong growth rates and huge consumption levels. When the bottom section of the pyramid rises to the top, think what would happen to the top? You'd see a lot of Nokia-Vertu kinda phones in the future.
We see that in contrast to push strategy which is highly structured and resource centric, pull strategy is modular and highly innovative. Mathematical modeling of your processes become slightly tougher but that's the way it works. My take: Pull strategy mixed with push strategy can work exceedingly well.
What we call as pull strategy is something all of us can comprehend and probably think of(like the biz model I had thought of). I never knew the existence of all this push and pull strategy then. Management Strategies are not rocket science. They are something which lies within us. It is just that certain management gurus give it a proper framework. Just think why pull strategy evolved? Just because of the karma of free market economics. The buying power of the junta has increased. So you gotta change your biz strategies to survive. Thus evolved the pull strategy. As simple as that. We call the guy who probably understood this market economics and gave a structural framework to this approach as an innovative entrepreneur.
My final word on this: Whenever you read something try to give them an analytical and strategic framework. Who knows, you might end up as one of the greatest innovators on this earth because innovations are not rocket science. Just think about what it takes to fit a mirror in your bureau. You don't have to spend for a dressing table!
Any company requires resources. If the resources are pushed into the system, we call it a push system. Most companies follow this kind of a push approach where they would predict the demand and stack up their inventory by pushing the resources onto it. It has been a very successful model till date. This is a structured approach. A good example of this push system is the biz model of the Walmart's apparel division. Walmart always looks up to standardising its apparels supplier. Walmart generally abstains itself from dealing with multiple suppliers when it comes to apparels business. But as a matter of fact Walmart has not been very successful in this apparels segment.
Ideally in the current market scenario,Walmart should try to 'pull' in from different suppliers who would have their own unique style of apparel design. Managing your supply chain becomes a lil difficult but still the benefits over weigh your costs. This is what I mean by the pull strategy. You don't push your stocks from a single supplier alone but you pull different resources from different suppliers
It's not the story of the Walmart alone. There are very good examples of companies which have thrived well by adopting this strategy. Amazon.com is one beautiful example. You can buy any book you would like to read on the face of this earth. Amazon.com pulls is from a lot of suppliers.
Another case is our own baazee.com, now ebay.in, which is a very fitting example where you enable p2p selling. Even traditional p2p websites like limewire adopt this pull strategy. e-choupals of ITC is also a wonderful example.
What we do when we blog? We pull in knowledge from various resources and present it for others to easily appreciate. To put it in a better way, corporates are now resorting to corporate-blogging where ideas are pulled in from all the employees.
Lean manufacturing system focused on eliminating wastes or making the inventory management better. You did not push in your inventory. Rather you pulled in when there was a demand. This was probably the first instance of pull systems, tho' I'm not very sure of it.
See I'm not trying to undermine the push systems which have been erstwhile very successful. But in this changing market dynamics, pull systems have evolved well and would definitely rule the roost in the near future. This is not tough to comprehend. What happens when you earn far more than the amount you can afford to spend in buying the costliest car in this earth? You would like to order a car which is specially manufactured for you with your own preferences. So the manufacturer can no longer push his inventory. He has to cater to certain special orders like that of yours. If there are 100 people like you, who'd ask the Mercedes to manufacture customised cars think what would happen? What if there are 10000? Slowly we see that the car manufacturer who was pushing his standardised raw materials into his inventory can't do so anymore. There are people who order special cars and the number of such people keeps changing. So he has to alter his quantitative as well as strategic modelling of his supply chain. This is what we mean by the pull strategy. This may be a hypothetical example, but this is how the world's buying behavior is evolving. We have strong growth rates and huge consumption levels. When the bottom section of the pyramid rises to the top, think what would happen to the top? You'd see a lot of Nokia-Vertu kinda phones in the future.
We see that in contrast to push strategy which is highly structured and resource centric, pull strategy is modular and highly innovative. Mathematical modeling of your processes become slightly tougher but that's the way it works. My take: Pull strategy mixed with push strategy can work exceedingly well.
What we call as pull strategy is something all of us can comprehend and probably think of(like the biz model I had thought of). I never knew the existence of all this push and pull strategy then. Management Strategies are not rocket science. They are something which lies within us. It is just that certain management gurus give it a proper framework. Just think why pull strategy evolved? Just because of the karma of free market economics. The buying power of the junta has increased. So you gotta change your biz strategies to survive. Thus evolved the pull strategy. As simple as that. We call the guy who probably understood this market economics and gave a structural framework to this approach as an innovative entrepreneur.
My final word on this: Whenever you read something try to give them an analytical and strategic framework. Who knows, you might end up as one of the greatest innovators on this earth because innovations are not rocket science. Just think about what it takes to fit a mirror in your bureau. You don't have to spend for a dressing table!
The Entrepreneurship bug
As it happens to a lot of wannabe MBAs, I have also been bitten(Slightly tho') by the entrepreneurship bug. Of late I have been thinking about a lot of business models. From 'niche food chain' biz model to some web based models, I have been doing some biz analysis.
We are living in the midst of a very powerful information revolution. Knowledge Management based and KPO kinda biz models have started being received well by the Venture Capitalists for at least a coupla years in India and about for half a decade in the better developed markets.
I thought I came up with a good biz model(happiness short lived!!). Let me explain my model very briefly. It's all about a lot of young naive consultants and market researchers, being hired by my portal at a relatively lower price, each of them with some special domain knowledge and being relatively naive at it. They might be students or employees working elsewhere who'd be willing to work 'part time' for my portal right in their house sitting in front of their desktop powered by high speed net connectivity. Companies would outsource low end 'Knowledge work', to my company, which can't be outsourced to niche consultants, who would in the first place not like to work in the basic lower end market research based problems and secondly, demand higher price. So companies would outsource such work to my company.
Advantages:
1 People can make quick money by working from their houses.
2 Online jobs are already available in India but still most of them are not too good in terms of the 'challenge of work' and the pay package to be taken up by the emerging 'knowledge class' of India( hmmm and yet another class, coined by me!) whose power or competency levels can't be ignored in times to come.
3 Information revolution has peaked in India with 2 Mbps connectivity no longer a dream
I don't want this blog post to be a writeup of a biz plan executive summary, so stopping here and not going into the nuances.
Again this is an optimisation of a biz plan I had drafted about an year earlier, where the sorta work was not Knowledge based, but kinda BPO work like documentation, lower end software work et all taken up by poor college students in a part time basis sitting in front of their desktop. To cut the long story short that plan targeted the (fortune at the)bottom of the pyramid, whereas my current modified plan targets a slightly different set of people.
I thought that my new plan was kinda unique in the sense that it targeted a separate class of people, who in the past have not worked online in spite of having credentials. When I was doing some web searching to further my plan, I stumbled across this company 'InnoCentive' which more or less performs the same kind of work that I had thought of. It posts challenging pharmaceutical problems with cash incentives for an innovative solution. I was a lil sad, but I learnt quite a bit. Management gurus call this kind of an approach as 'pull strategy' where the resources are pulled, as in our case where the resources are different people working from different parts of the world. I'd explain the crux of this pull strategy and how this strategy would evolve as a powerful strategy in my next blog post...Do read it if you feel that you haven't gained much insight in this post.
We are living in the midst of a very powerful information revolution. Knowledge Management based and KPO kinda biz models have started being received well by the Venture Capitalists for at least a coupla years in India and about for half a decade in the better developed markets.
I thought I came up with a good biz model(happiness short lived!!). Let me explain my model very briefly. It's all about a lot of young naive consultants and market researchers, being hired by my portal at a relatively lower price, each of them with some special domain knowledge and being relatively naive at it. They might be students or employees working elsewhere who'd be willing to work 'part time' for my portal right in their house sitting in front of their desktop powered by high speed net connectivity. Companies would outsource low end 'Knowledge work', to my company, which can't be outsourced to niche consultants, who would in the first place not like to work in the basic lower end market research based problems and secondly, demand higher price. So companies would outsource such work to my company.
Advantages:
1 People can make quick money by working from their houses.
2 Online jobs are already available in India but still most of them are not too good in terms of the 'challenge of work' and the pay package to be taken up by the emerging 'knowledge class' of India( hmmm and yet another class, coined by me!) whose power or competency levels can't be ignored in times to come.
3 Information revolution has peaked in India with 2 Mbps connectivity no longer a dream
I don't want this blog post to be a writeup of a biz plan executive summary, so stopping here and not going into the nuances.
Again this is an optimisation of a biz plan I had drafted about an year earlier, where the sorta work was not Knowledge based, but kinda BPO work like documentation, lower end software work et all taken up by poor college students in a part time basis sitting in front of their desktop. To cut the long story short that plan targeted the (fortune at the)bottom of the pyramid, whereas my current modified plan targets a slightly different set of people.
I thought that my new plan was kinda unique in the sense that it targeted a separate class of people, who in the past have not worked online in spite of having credentials. When I was doing some web searching to further my plan, I stumbled across this company 'InnoCentive' which more or less performs the same kind of work that I had thought of. It posts challenging pharmaceutical problems with cash incentives for an innovative solution. I was a lil sad, but I learnt quite a bit. Management gurus call this kind of an approach as 'pull strategy' where the resources are pulled, as in our case where the resources are different people working from different parts of the world. I'd explain the crux of this pull strategy and how this strategy would evolve as a powerful strategy in my next blog post...Do read it if you feel that you haven't gained much insight in this post.
Subscribe to:
Posts (Atom)
