The journey of an enterprise from birth to death...

In a way, an enterprise is quite similar to any living entity on earth. Arie De Geus has actually identified and promoted this view in "The Living Company".

Having witnessed all of it in a short span of 20 years of my professional career; I will trace the journey from inception to extinction from my own viewpoint. It is an attempt to guide the budding entrepreneurs at all stages of evolution of an enterprise.

Keep watching this space for the following posts on this subject...

From entrepreneurship to intrapreneurship...

Mostly entrepreneurship and employment are considered mutually exclusive. In this post, we will argue a case for their coexistence. Towards the end we will also look at at least one company which has successfully achieved it. Let's start with looking at the core set of problems faced by individuals (aspiring entrepreneurs) and organizations.

People turn entrepreneurs for a number of reasons. The prime drivers could be a strong desire for independence, predetermined goals (decided early in life), opportunity OR just the financial incentive. However the path turns out to be quite a challenge. Few survive beyond the first couple of years and the breakeven rate is of the order of 2%. The failures can be attributed to thousands of reasons and the number will probably approach the number of failures, but we can categorize them into two primary categories:

• Failure due to poor business concept : The basic idea was poorly conceptualized, the startup was run over by stronger competition, or simply the customers were not ready to accept the product.
• Failure due to execution issues : I have seen many great ideas fail because of trivial reasons. Lack of capital and infrastructure, poor access to the target market, lack of management skills.
  

Some of the initiatives manage to go past these stages and turn into large enterprises. As they near near the maturity level of their industry, product or service; the strategy starts to fail. Their values, processes and people fail to reinvent themselves, leading to decline in business.

A quick look at this situation, gives us a perspective. Mature organizations possess all the resources and abilities, due to which individuals fail. If they are willing to promote the entrepreneur within the organization and give them the space to realize their dreams, it would be a win win situation for all. A simple and quick maths reveals that a bit of wealth sharing can lead to exponential growth and longer life for the organizations...

The company which has implemented an almost perfect strategy in this respect is 3M. Innovation being centric to the organizational philosophy, 3M has promoted organization level innovation (spin-offs / divisions created by employees); whenever it made a strong business case. In my view, it is "Built to survive...".

Research lab to Market vs. Product Reverse Engineering...

This is a very interesting question and a difficult one too. Still I will attempt to answer...

Business ideas are usually generated by observers close to the customer; where they sense an unfulfilled need and create a business to address the gap. It may still lead to sizable business, but I think it is generally not associated with major technological breakthroughs.

Most of academic research (at least historically) was not business oriented. The researchers worked just to feel the joy of discovery / invention. However increasingly the research is becoming directed (try to solve a business problem). The implications are interesting... We no longer see many fundamental breakthroughs in basic sciences. For example compare the 1900-1950 period with 1950-2000; you will find that the second part of the century is full of technology breakthroughs and very few fundamental breakthroughs.

Overall, I no longer see the scientists who will spend 25 years of their life to make a fundamental breakthrough.

Basic Lab research to market vs. reverse engineering is a question of ethics at an individual level and a separate issue of business strategy. From lab to market could give you a first mover advantage while reverse engineering will give you lower costs and avoid many mistakes the first mover makes. There are cases in favour of both, so I guess the context plays an important role... I think it is more of an execution issue...

Google turns VC

A recent article in BusinessWeek details out this new initiative from Google and they seem to be using the available cash to fund startups at an early stage and buying out many of them at a later stage. At the minimum it increases options for the aspiring entrepreneurs...

Basic Sciences vs. Engineering

As I have pointed out earlier the attitude towards and trends in basic sciences are a matter of concern. In this post I will reflect more on this topic.

Starting from 50's till about early 80's the talent was equally distributed between basic sciences and engineering, primarily due to lack of opportunities and a huge demand supply gap. Many of the scholars ended up choosing teaching as a profession, still managing to maintain the educational ecosystem to a large degree. By the time I decided to go to college (in early 80's), a BS in basic sciences / maths was accompanied with a tag of failure. It was a common perception that all bright students got admission in engineering ! I think this is where things start to go wrong...

By 1990's, the government had largely liberalized the "ecosystem of technical education". Many options opened up for students, virtually squeezing majority (I would not say all, because few people remained by choice OR ignorance) of the good talent out of the basic science streams.

The rest of it is only hypothesis, without any concrete data, but it is also the most probable scenario in future. I think this is how our future will look like :

• Increasing financial returns, disproportionate to the individual ability will erode the value of education (happened in most of the societies, where high growth created large opportunities). Since opportunities are abundant, students will have lesser incentive to learn...
  
• Also, given the current incentive levels of an average teacher, education no longer looks an exciting career option.
• So we are likely to enter into a negative spiral where falling education standards and an indifferent teaching staff will reinforce each other; eroding our long term competitiveness.

There is another important relationship, which needs to be understood. All technologies / systems go through a continuous improvement process till they become commodity. This phase is usually driven by engineering, but the major disruption comes from fundamental breakthrough in sciences. This implies that excellence in science is essential for making big leaps in competitiveness.

What is the way out ? There are no easy answers in a country with billion people and hence any radical change at the ground level requires huge investment. But many of us can start to change things around us. Even if each one of us can influence 10 others in the community / close relatives, it would make a huge difference...

Mathematics; A story of indifference, love and opportunity...

To be very straightforward, I hated mathematics almost my entire student life. Can't really zero on to the precise reasons, it could be either biological wiring OR uninspiring teachers in the formative years OR both. Looking back after so many years, I think I had reasonable ability, even though I was not wired to be a genius in this subject.

To cut down a long story short, I studied mathematics for the 12 years in school and 2 years at engineering because it is essential to get to the next level; but things were about to change...

In our third year of a 5 year degree course, we had this beautiful subject called "Electromagnetic Field Theory" and it was taught by one of the two teachers who left a long term impression on my life; Mr. Basu. All of a sudden, I found myself dreaming differential equations and visualizing the flux lines crossing different surfaces and it was just wonderful. Maxwell's 4 equations had summed it (the subject) so well that I just wondered about the beauty of his thought for a really long time.

This was followed by another 2 subjects which gave further wings to my imagination. Communication theory and Digital Signal Processing. Even though I got a B in both of them, but it was great visualizing the signals represented by complex equations (no longer remember the stuff) and then doing transformations like Fourier, Z and Hilbert on them.

With graduation, I lost touch and never thought about this subject for a really long time. After so many years in industry, I am discovering the real potential of this subject. Right from solving the protein folding problem to drug design to predicting tiredness in an ATC's voice and (not to forget) the application of analytics to every field of modern industry and society, it is a tool which can help us debug and discover answers to some of the most difficult questions facing us.

Even though our current generation is largely ignorant about it's potential; I think that some of the biggest opportunities in business will emerge out of this field.

So my message to some of you who love this subject is; hang on and a great future awaits you, if you have the patience to discover the opportunity...

The decline of Science and Mathematics in India...

Last month I read a news article in the newspapers that science and maths cutoffs are lower than Arts and Commerce. This is an almost complete reversal of student preferences in less than a decade !

Contrast this with the Blue Book published in US, which points to the fact that the future competitiveness of US will depend on fundamental scientific breakthroughs in basic sciences and mathematics.

This raises many questions on the direction our entire society is taking and the foundations we are now laying for the next generation. I will share more thoughts on this topic in my next posts...

My experiments with entrepreneuship..

Starting from the early years with only a dream in heart to the recent adventure with a well calculated risk and huge probability of success (still the 0.1% played it's part), I thought I had seen a lot and it's been a great learning process. The collective experience is condensed into the following paragraph...

If you dream to create an enterprise, expect at least a million problems and everything which can go wrong to go wrong. Here is the litmus test, "Consider yourself all alone with all your possessions, i.e. desire, vision, abilities, knowledge, skills, cash, credit cards, an idea OR still better a prototype. Now, can you make it happen with no possibility of any external help ?". If the answer is yes, you are ready to take a plunge...

This thought crystallized only after I heard my CEO Praveen Kankaria (impetus.co.in, intellicus.com, clear-trail.com and more in pipeline) talk about his own journey. All the stories I have heard are astonishingly similar; may it be Jaswinder S. Chaddha of MarketRx or Ajay Lavakare of RMSI...

My top three picks of essential elements will be

• Clarity of vision.
• Belief in self, that eventually you will prevail.
• Perseverance to see it to the end.

Last but not the least, let's not forget that luck plays it's own major role. This judgment will determine if you will fight (the battle) to win OR fight to extinction...

Opportunity at the bottom of the pyramid : Healthcare

Last year I came across a book The End of Medicine: How Silicon Valley (and Naked Mice) Will Reboot Your Doctor by Andy Kessler. Even though I couldn't locate the book in Indian bookstores, the concept did trigger an interesting thought process from business perspective...

Before I share my thoughts, I would like to give a clarification. IT has been used in healthcare industry in a big way, but mostly in supporting processes which provide incremental innovation to aid the existing system. We will attempt to build a case for radical transformation of the industry.

The first thought (in business terms) is that the target market comprises primarily of non-users OR partially served users; i.e. 90% of the Indian population comprises of people, who cannot afford the expensive services and now increasingly expensive drugs. This is the bottom of the pyramid.

Aggregation of business at this level would be a huge opportunity in a country with a billion people, even if the per head realization may be extremely low. This is going to be a win for all; people who will be able to afford the medical services and the founders will build a business of gigantic proportions...

Here is an idea which can be of great value, even though it cannot tap the bottom of the pyramid.

One of the key problems and easiest to solve is the information asymmetry. In a typical transaction, the patient rarely participates in the decision making process.

What if we give a device in patient's hand where he can get a real time information on the proposed diagnostics, line of investigation, expected results and subsequent course of action...

What if this devices immediately shows to the patient alternatives to prescribed medicines which can potentially lower the cost of medicines... This decision can happen in consultation with the doctor...

Will share more on this subject at a later point of time...

Innovation: Outsourcing's Second Wave...

This was an article published in Oct-2006 in BusinessWeek by Navi Radjou of Forrester Research.

The key message is simple and significant : To go up the value chain and compete against global giants, we need to understand the end user problems, innovate to fix them and hence co-create value with our customers. This is what even the customer's have started to expect.

The impact of this factor on the way we conduct business is going to be significant. Let's at least start to think about it ...

The S curve and the Indian Software Industry...

Except for a brief period of 2001-2003 (collapse of internet bubble followed by 9/11), the present generation has only seen the rise of Indian IT industry, right from the inception in mid 70's, through the slow growth of 80's and phenomenal growth in 90's and beyond...and all of us believe that this phenomenon will continue till eternity.

But every system which goes up eventually slows down when the constraints gain more significance. While the timing remains a question mark, the slowdown in the present model is inevitable. Can we look over the horizon and recognize these constraints ? Possibly yes, at least I think the following factors are significant and need serious consideration...

The quality of manpower. The industry was build by people with phenomenal ability and attitude who worked against every constraint to win against very difficult odds. Times have changed now ! Financial returns in a profession take precedence over interest and ability of individuals while they make a career choice. I no longer see those great engineers I frequently encountered during the mid 80's...

The decline in the educational standards. The less said is better here. There has been mass commercialization of education and the quality has steadily declined. I think the most critical factor is that the quest to discover and learn has taken a backseat. In today's world education is all about acquiring tags and encashing them. Unfortunately, we are not alone and the phenomenon seems to be universal.

Too much reliance on a single geography and business model. As we have seen in the recent Re. vs. US$ exchange rate swings, small flutter in this model can have significant implications. While many companies are making efforts to mitigate this risk, the rate of change is not adequate.

Ignoring the competition. This is a classical mistake emerging out of success across time and industries. While the competition may seem to be insignificant, but it is gaining traction.

The unexpected event ! Do we ever think of emerging development models which do not require design, coding and testing (bread and butter of IT industry) and are we ready to restructure ourselves, if any of that happens in near future ?

One closing remark ! My personal opinion is that everything will continue to look like the same as before and nothing will change in the short term. However addressing these fundamental issues will ensure our long term competitiveness...

The long tail and Italian economy...

Ever wondered why we don't hear about mega sized multinationals in Italy ! That is because there aren't many and as an economy, Italy has a disproportionate number of SMB's...

This model seems to be very promising for the future. Small companies are agile and efficient. They are usually exciting places to work at with a small family like feeling. They usually create their own niches and with a unique proposition reaching the target customer's is a smaller problem in the Google Economy...

This model also has the advantage of spreading wealth more evenly; which is evident from the large middle class across western Europe.

Is it the right model for India ? I think so and would like to know the views of the readers...

Focus on problems to create value...

Indians are problem solvers and this is in our blood. Starting right from school days when we solved thousands of problems in mathematics to all the fancy websites of IT service companies, the best thing we do is solve problems.

This is what makes us great managers, finding perfect solutions in resource constrained world. However, this approach is counterproductive when you want to build an enterprise. All great (and large) businesses are built on recognizing the user problems and providing solutions to them.

Think about it... If it makes sense, let's start to think about the user problems and then work towards building a solution. Hopefully we will build a series of next generation enterprises...

Is Indian Software Industry at inflection point ?

The (great !) Indian Software Services Model may be reaching a point of saturation...

With the decline in availability of quality manpower, rising wage bills, falling profits ($$$) we seem to be heading towards the inevitable; which most of the people in this industry do not want to acknowledge. In few of the recent conferences, some of our great leaders in industry actually said that these are non issues...

There are absolutely no reasons to get paranoid about this issue. The momentum gained so far, will propel us forward for next few years. However, in my opinion, the time has come to acknowledge the reality and wakeup to face the emerging challenges.

The answer is simple and obvious (go up in the value chain), and many of us have talked about the multiple end points in this journey. We also seem to have the necessary resources to make it happen, but the key bottleneck remains... changing our mindset to take on more risks and challenges, rather than living a comfortable life with T&M models...

I will share more of my thoughts (on related topics) in the forthcoming posts...