There is no denying the fact that the world economy is going through one of the most turbulent phases in the history. Never before one has seen such a mass impact on industry across the board, which got sparkled by the housing sector crash in the USA opening the Pandora’s box of global credit crisis. The spillover from the subprime mortgage crisis is weakening both consumer confidence and the consumer spending—much of it on credit—that has been buoying the U.S. economy. Most of the leading global economies are in recession and this economic slowdown will probably last much longer than the experts initially thought. We can only take heart from the fact that it’s not the end of the world!
We all know ups and downs in business, economy and more so in the stock markets, are cyclical and periodic, so while there’s no need to be overly optimistic when you are riding through the peak (like a year back) or be overly pessimistic when you are riding through the bottom (like we are doing now). Fact is all these phases will pass and 80% of the cycle time you are in that zone when profitable business happens and economies prosper. When will that 80% zone come up again? Well, no one is God and can predict that. But the theories point out that the troughs like the current phenomenon usually last about 12-18 months. Considering that we are almost 6 months into this downturn (Though the US market has reportedly slipped into a recession since December 2007 we shall take the global recession start time at mid of 2008) – we have to hold fast for another year or so before the winds starts coming back to our sails again. But it is also a harsh truth that during this testing period, some organizations may cease to exist.
Let’s look at the scenario from the context of small and mid sized IT and software companies and look at some possible strategies to counter this global downturn. Recession times mean lower consumer spending, lower consumer spending means lower marketing budgets and lower sales, all these soon become a cycle. Now is the time to put together a survival strategy to ensure your business survival when conditions could be about to become much more challenging for the next 12 months. Following are some basic strategies to focus on, assuming you already have got your expenses under control and are maintaining a positive cashflow.
Pricing and understanding customers
Pricing strategy varies with time. In global downturns, some customers may feel the credit crunch and if you can understand that in advance, you can adopt a variable pricing model to suit various customers’ pockets. You do not necessarily have to cut list prices, but you may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller services packs more aggressively. Remember, IT and software development budgets are the first ones to get slashed in global downturns. Rather than vanilla services, packaged services with clear value driven results and ROI will provide better results. The numbers are few, but there will be takers for critical business areas that need IT for survival and growth.
As with investing, diversifying services and products offer you a wider market and hedge your risks. Even simply repackaging product and services to sell to different markets can show good results.
Concentrate on customers
Client retention, not acquisition, becomes a top priority now. Show them how well you’ve done - show them the savings they make, the profits they earn, from the value of their services. That way, if economic conditions do take a serious dive, you have demonstrated the essential value of your services, and the need to retain them under much tougher market conditions. Consider conducting client satisfaction surveys for monitoring success. Make your company's offerings more valuable with speedy deliveries or flexible payment terms. Your customers are also feeling the pain in recession time. They will appreciate it and will prefer to stay with you.
Retaining existing business is the key, and one has to be extra cautious. These are times when new customer acquisition is much more difficult and the decision cycle times increase two folds. The best you can do is not to lose an existing customer, build customer loyalty, and at least keep up the same volumes of business with them. Your existing customers will keep you afloat, albeit sometimes with lower volumes and increased credit periods.
Keep innovating on focus areas
For IT SMEs to compete against the larger, more established enterprises, they still need to invest in innovation. The typical mistake that SMEs make is, in the spree to cut cost, they reduce R&D budgets mercilessly, obviously with the understanding that this is an expense they can do without. Absolutely wrong! Innovation is the only potent weapon that keeps one competitive, with a focus on new technologies, products and processes to provide more value for money to customers. However, to maximize ROI, SMEs need to align their innovation efforts with their overall business strategies and invest on the areas that have direct impacts on business in near terms.
Invest in technology and new product development
Saving money often means cutting back on new products and services during an economic downturn. This hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers. This is probably the best time to build innovative products. You are not in time pressure and probably the cost of resources is much less than in regular times. The advantage that one can generate now, will start showing in the results when the tide turns.
Also these are the times, when the rise of social networking and consumer power means that companies have to be part of a larger conversation with their customers. This gives all the reason to be one step ahead of your competition by investing in right technologies. While cost cutting is a must, growth should never be compromised. The compromising companies typically miss the bus when the tide turns simply because they have not invested prudently and do not have the resources to pull their growth engine. By turning defensive, top managers take innovation off the top of the official agenda and replace it with systems management and squeezing costs. It is extremely hard to reverse this when growth returns.
Cutting back on outside consultancies also seems a quick way to save money. Yet one of the key ways of introducing change into business culture is to bring in outside innovation and design consultants. They know what companies across a broad range of industries around the world are doing to promote change. Not receiving this information can hurt a company's global competitive position.
Accelerate Marketing
Another typical mistake done by IT SMEs during slow economic times is to cut down heavily on marketing budgets. The primary reason of course is that the ROI of a marketing budget is not always visible in short terms. Another factor with typical Indian IT services companies is that, they are typically delivery centric organizations and are administered by techies at the helm. A mind block can easily set in under the circumstances which makes the entrepreneurs myopic about the immediate problem at hand, overlooking the long term growth aspect and sacrifice the tool in near term that would have helped them “get there”.
Now is the time to leap ahead of competitors in the minds of your clients through a more aggressive and integrated marketing approach. Also, instead of cutting the market research budget for example, you need to know more than ever how consumers are redefining value and responding to the recession. Successful companies do not abandon their marketing strategies in a recession; they adapt them. Restructuring marketing budgets and cutting down on discretionary spending and traveling should be the order of the day. But key market facing activities, promotions and research should be compromised at the danger of falling behind competition drastically in due course!
Keep the staff motivated
Keeping staff motivated during an economic downturn is critical. Your employees are the ones who will help the business avoid the impact of a slump so it’s important to keep them incentivised and keen to perform well. Wise organizations recognize the need to retain the level of investment in employees because this is the resource which will provide the competitive edge for your business and they are their best ambassadors. Low-cost incentive packages for businesses on tighter budgets, from a retro sports day, desk-side massages or movie shows to a simple text to win campaign or dinner or sharing cash profits; there is no need to stop incentivising staff – you’ve just got to realize the criticality of keeping employees motivated and use a little imagination.
Come what may, hold on to your talent
In the obvious plea to cut costs, lot of companies revert to the age-old tactics of down sizing. They do clean up the bottom performers in the process, but also end up a part of the cream of the talent as well. Most of the time, it is poor or lack of communication to blame, added to lack of adequate incentives for the performers and potentials. The grave mistake to indulge in is undergoing the downsizing exercise without doing anything to counter the spread of fear factor and in the working environment. Not only does the organization lose on productivity, with a sense of insecurity spreading, it takes a hit of losing some key performers as well.
While a clean-up action on performance basis is necessary, even in peak of economy, a downsizing exercise always comes at a bigger cost – a loss of total employee morale, spread of negative energy, loss of some good performers and brand ambassadors, productivity and eroding brand value in the long run. Effective communication across ranks and levels and visible incentive programs should be in place to counter the ill effects. But given a choice, a down sizing strategy should be an absolute last resort.
In conclusion, winners always emerge out of recessions and they almost always beat their competition on the basis of something new. Apple worked on iTunes, iPod and its retail stores during the last recession and came out swinging once growth returned to destroy its competition. Apple didn't make the typical recession time errors, neither should you!
If you want to take this recession and turn it around for your company's benefit, take some time to plan. Have your top management team huddled together. Your think tank has to work overtime now and you have to utilize their collective brains and teamwork and expertise to get you out of this. An economic offsite can be most productive, a little added cost here can save lot of other costs in future! Most small companies keep an absolute hush-hush about the planning and half the team members of the planning committee are in dark as to what the other half is upto. This is recipe for disaster.
More the pressure, more you should talk it out within the team and go for collective decisions. Also, this is the time when typically you see more and more negative energies creeping into your organization. A little budget on team building activities and games, even counseling sessions can keep up the tempo and morale high. The working environment can never be compromised. If you preached “work hard, play hard” philosophy in good times, stick on to it. Dropping the “play hard factor” can result in vanishing of the “work hard factor” too.
Be flexible and creative in coming up with solutions rather than making wholesale changes or slashes to your employee ranks. You will find this simple tip helpful in future. If you keep the big picture in focus and your head down aiming and working towards it, your company will make it through successfully to the other side of economic "Down". All the best!
Wednesday, December 3, 2008
Thursday, November 27, 2008
Culture rules! Part 3 –The founder’s influence
Sometimes one gets a hint of the culture of a company by simply following founder members closely. Let’s take a break from experience recitals this episode and look at the fundamentals of corporate culture once again and digest some theories.
Corporate culture is the shared values and meanings that members hold in common and that are practiced by an organization’s leaders. Corporate culture is a powerful force that affects individuals in very real ways. Corporate culture is related to ethics through the values and leadership styles that the leaders practice; the company model, the rituals and symbols that organizations value, and the way organizational executives and members communicate among themselves and with stakeholders.
Corporate values are used to define corporate culture and drive operations found in “strong” corporate cultures. The IBMs, Microsofts, Googles, Boeings, GMs and Unilevers all exemplify “strong” cultures. They all have a shared philosophy, they value the importance of people, they all have heroes that symbolize the success of the company, and they celebrate rituals, which provide opportunities for caring and sharing, for developing a spirit of “oneness”.
Organizations that stress competition, profit, and economic or self-interests over stakeholder obligations and that have on morally active direction often have cultures that are in trouble. The founders of an organization set the tone for the beginning stage of what a company’s culture will be. The practices of the founders and first employees begin the rituals, the corporate stories, and norms. Ethics are a major factor in the development of a positive or negative culture. If companies allow unethical acts to occur, this behavior perpetuates itself through the life of the organization. Promotions and raises also affect the type of culture a company has. Is everyone given a chance to excel or are there picks and choose as to who will get the promotion? This type of behavior creates mistrust among employees of a company, thus causing an intense environment.
There are many different questions asked about guidelines of how to create and maintain a strong corporate culture. One may be able to set up a goal or future vision to help strengthen his or her environment. This idea can help create an environment, which focus on enhancing the founders’ mission and objectives. Communication also affects the strength of weakness of a culture. It is essential that management communicate the accomplishments as well as the failures of the departments of the organization, not only vertically but horizontally as well.
Reward criteria, conflict tolerance, and control are dimensions of a corporate culture. The culture of a company is very influential in daily transactions. It establishes what can and cannot be done. Some practices may be written down or may not be written down and are learned through observation. Planning, leading, organizing, and controlling are functions that are affected by the strength of weakness of a culture.
Strong cultures share a common goal and have a positive environment. They hold true the not only the mission and objectives of the founding members of the organization, but they are aware of their employee and the roles they play in its existences. Employee participation and involvement creates a surrounding that perpetuates positive outcomes.
Culture clearly exists in both visible and invisible components, including actual building infrastructure, common speech patterns, and processes. Some facets of culture, for example, can be organization structure, respect for practices and people, business like interactions, a shared philosophy, valuing the importance of people, having heroes that symbolize the success of the company, and celebrating rituals. This in turn leads to Weiss’s concepts of “oneness” and “we ness” which is also demonstrated in the culture. Founders are the origin of corporate culture which employees learn vicariously. Individuals who have worked at organizations with strong cultures know the culture best and presumably like it, or they would have removed themselves from it. The existentially compelling question of culture in organizations is well documented, but suggested answers for it are many and constantly fluctuating. What can be known is that corporate culture is a powerful force that affects individuals in very real ways.
Bibliography:
Solomon, R.C. (1997). It’s good business: Ethics and free enterprise for the new millennium
Weiss, J.W. (1994). Business Ethics: A managerial, stakeholder approach.
Irish Hoosier (2006). Corporate Culture.
Corporate culture is the shared values and meanings that members hold in common and that are practiced by an organization’s leaders. Corporate culture is a powerful force that affects individuals in very real ways. Corporate culture is related to ethics through the values and leadership styles that the leaders practice; the company model, the rituals and symbols that organizations value, and the way organizational executives and members communicate among themselves and with stakeholders.
Corporate values are used to define corporate culture and drive operations found in “strong” corporate cultures. The IBMs, Microsofts, Googles, Boeings, GMs and Unilevers all exemplify “strong” cultures. They all have a shared philosophy, they value the importance of people, they all have heroes that symbolize the success of the company, and they celebrate rituals, which provide opportunities for caring and sharing, for developing a spirit of “oneness”.
Organizations that stress competition, profit, and economic or self-interests over stakeholder obligations and that have on morally active direction often have cultures that are in trouble. The founders of an organization set the tone for the beginning stage of what a company’s culture will be. The practices of the founders and first employees begin the rituals, the corporate stories, and norms. Ethics are a major factor in the development of a positive or negative culture. If companies allow unethical acts to occur, this behavior perpetuates itself through the life of the organization. Promotions and raises also affect the type of culture a company has. Is everyone given a chance to excel or are there picks and choose as to who will get the promotion? This type of behavior creates mistrust among employees of a company, thus causing an intense environment.
There are many different questions asked about guidelines of how to create and maintain a strong corporate culture. One may be able to set up a goal or future vision to help strengthen his or her environment. This idea can help create an environment, which focus on enhancing the founders’ mission and objectives. Communication also affects the strength of weakness of a culture. It is essential that management communicate the accomplishments as well as the failures of the departments of the organization, not only vertically but horizontally as well.
Reward criteria, conflict tolerance, and control are dimensions of a corporate culture. The culture of a company is very influential in daily transactions. It establishes what can and cannot be done. Some practices may be written down or may not be written down and are learned through observation. Planning, leading, organizing, and controlling are functions that are affected by the strength of weakness of a culture.
Strong cultures share a common goal and have a positive environment. They hold true the not only the mission and objectives of the founding members of the organization, but they are aware of their employee and the roles they play in its existences. Employee participation and involvement creates a surrounding that perpetuates positive outcomes.
Culture clearly exists in both visible and invisible components, including actual building infrastructure, common speech patterns, and processes. Some facets of culture, for example, can be organization structure, respect for practices and people, business like interactions, a shared philosophy, valuing the importance of people, having heroes that symbolize the success of the company, and celebrating rituals. This in turn leads to Weiss’s concepts of “oneness” and “we ness” which is also demonstrated in the culture. Founders are the origin of corporate culture which employees learn vicariously. Individuals who have worked at organizations with strong cultures know the culture best and presumably like it, or they would have removed themselves from it. The existentially compelling question of culture in organizations is well documented, but suggested answers for it are many and constantly fluctuating. What can be known is that corporate culture is a powerful force that affects individuals in very real ways.
Bibliography:
Solomon, R.C. (1997). It’s good business: Ethics and free enterprise for the new millennium
Weiss, J.W. (1994). Business Ethics: A managerial, stakeholder approach.
Irish Hoosier (2006). Corporate Culture.
Culture rules! Part 2 -The eGuru
I was going through a transition that time in IBM sometime early 2000. I decided that I have devoted enough of my time upbringing our services partners and the Business Partner Program can run in its own momentum. Finally! It was time to jump into something more interesting. Dot com bubble was at its peak those days, and IBM almost became synonymous with e-Business, ruling the world, changing the way e-commerce happens and transforming, it could, even the local panwala’s business into the big E.
So I decided, this must be a wonderful moment to get engrossed into the E-world and promptly got myself certified as an e-business advisor. That looks simple in simple line, but I did have to undergo serious preparation and sit for exams! I became an IBM e-business advisor and started advising our clients on how to convert their business into simply-E.
After certifying myself, I thought I should now give to the organization my “other knowledge and skills”. I decided its time to train our teams about nuances of specialized customer facing presentation and communication skills. I was a voluntary member of the training team of my previous company TCS. I shared the coaching shoes with the Ernst & Young training team in coaching TCS project teams. It was time to teach the IBMer kids some tricks of the trade! I filed my nomination with the training group, and next day a gentleman popped up from nowhere and introduced himself as one of the training coordinators.
IBM India is India HQ in Bangalore in 2000 was about 5000 people that time sitting in 3 buildings. I was hoping for just an email with a thank you note (there were not too many internal trainers) and fixing my course name tag in the training calendar. After all, with so any people to handle in a mega organization where is the time for anything else, but an email. And make no mistake, email was a very effective communication tool in a world champ organization like IBM. It’s a mandatory business etiquette in IBM to read business emails, and reply the same day, at the earliest possible time. It used to be an “art” to push it out of one’s table at the first opportunity and fire it back to the sender’s court.
So I was pleasantly surprised! The gentleman introduced himself and proceeded to have a discussion on whatever I mentioned in my nomination to understand my motivation to volunteer for the training session. After a rather long session and several satisfactory answers, he looked pleased with the answers. He then meticulously proceeded to explain the training process meticulously and the logistics support his group will be providing me, including broadcasting support for the content and topic in all the buildings. He personally thanked me before leaving and yes, after the training session I got a little memento with a certificate too.
I was impressed, I saw it as component of a positive learning and mentoring culture of the organization, where the authorities not only went that extra mile to ensure the quality of the training and content, but also took total care of the volunteer with all back up support, and personal handholding volunteers despite their busy work schedule. I loved the trait to my heart. Was that a personal passion of the training department person or was it the process of the company? Neither! I saw similar behaviorism in all these service departments and never found anything like such a detailed process in writing anywhere.
What then is the secret of sustaining such practices? By now you have guessed it right, it is the corporate culture that once internalized, becomes a guiding spirit behind every individual’s action. Of course it comes through belief-preach-practice cycle that goes much beyond written codes.
So I decided, this must be a wonderful moment to get engrossed into the E-world and promptly got myself certified as an e-business advisor. That looks simple in simple line, but I did have to undergo serious preparation and sit for exams! I became an IBM e-business advisor and started advising our clients on how to convert their business into simply-E.
After certifying myself, I thought I should now give to the organization my “other knowledge and skills”. I decided its time to train our teams about nuances of specialized customer facing presentation and communication skills. I was a voluntary member of the training team of my previous company TCS. I shared the coaching shoes with the Ernst & Young training team in coaching TCS project teams. It was time to teach the IBMer kids some tricks of the trade! I filed my nomination with the training group, and next day a gentleman popped up from nowhere and introduced himself as one of the training coordinators.
IBM India is India HQ in Bangalore in 2000 was about 5000 people that time sitting in 3 buildings. I was hoping for just an email with a thank you note (there were not too many internal trainers) and fixing my course name tag in the training calendar. After all, with so any people to handle in a mega organization where is the time for anything else, but an email. And make no mistake, email was a very effective communication tool in a world champ organization like IBM. It’s a mandatory business etiquette in IBM to read business emails, and reply the same day, at the earliest possible time. It used to be an “art” to push it out of one’s table at the first opportunity and fire it back to the sender’s court.
So I was pleasantly surprised! The gentleman introduced himself and proceeded to have a discussion on whatever I mentioned in my nomination to understand my motivation to volunteer for the training session. After a rather long session and several satisfactory answers, he looked pleased with the answers. He then meticulously proceeded to explain the training process meticulously and the logistics support his group will be providing me, including broadcasting support for the content and topic in all the buildings. He personally thanked me before leaving and yes, after the training session I got a little memento with a certificate too.
I was impressed, I saw it as component of a positive learning and mentoring culture of the organization, where the authorities not only went that extra mile to ensure the quality of the training and content, but also took total care of the volunteer with all back up support, and personal handholding volunteers despite their busy work schedule. I loved the trait to my heart. Was that a personal passion of the training department person or was it the process of the company? Neither! I saw similar behaviorism in all these service departments and never found anything like such a detailed process in writing anywhere.
What then is the secret of sustaining such practices? By now you have guessed it right, it is the corporate culture that once internalized, becomes a guiding spirit behind every individual’s action. Of course it comes through belief-preach-practice cycle that goes much beyond written codes.
Culture Rules!
A friend and I with our families were strolling one holiday evening in the Park Street neighborhood looking for a place to dine. My friend suggested a place with great Muglai cuisine and I nodded in agreement. I took notice of the parking attendant take special care in helping us park neatly in the narrow slot. He needlessly gave us a big smile and greeted us in “chust Urdu”. The doorkeeper, with a noticeable moustache and dressed like a Darbari attendant of a Sultan, opened the door and mumbled something in Urdu which sounded like a nice greeting too. As you were about to take a table, a couple of helpers arrive from nowhere and helped us settle down.
The Order taker arrives nicely dressed up as the sultan’s chief advisor and proceeded to e explain the cuisines and advise us in our menu selections. As the Sultan’s advisor left with the order, a musician duo approached us and asked us if we prefer to listen to a short version of Darbari Kanada Thumri while we wait for our dinner. Without going down to the details of the experience (oh yes, the food was out of this world too!), I must admit I just loved the experience. A manager approached us as we were waiting for our bill and chatted on the service and the cooking in general and explained that his restaurant is always striving to find new ways of customer satisfaction and of course no one can give him better tips that customers like us! I made up my mind to visit there again and tell my other friends how different this whole experience was.
Sounds familiar? I am sure all of us must have faced similar experiences in day to day situations and get awed by the way some people give words like “customer satisfaction” and “customer care” a new definition. What does it take to make it happen? Customer satisfaction is as simple as doing things for customer in a way that satisfies his needs and exceeds his expectations - which is the surprise element makes him come back – and more surprises you throw at him, more he comes back to be pleasantly surprised! Easy! This is human psychology and the customer is a human too! And finally the act sums up in cross checking with him (feedback) whether he is impressed. We know all this. It’s all in the book, nothing new! But do we always do it? That’s another story, right? So why do we miss the bus sometimes? What is missing?
I noticed as I was coming out of that restaurant in Kolkata, and I saw a small wall hanging the wall beside the exit gate. As the all-mush-Sultan’s Darbari attendant was opening the exit door for us, I quickly strained my eyes to read the wall hanging. It said “We care for our customer and we do it by practice”!
The word “practice” hit me. Something that we believe in and do by practice over and over again becomes something deeply rooted in us. An idea or a strategy doesn’t become a reality unless it is backed by a sustained action which is practiced, perfected and habitualized. Not only it becomes a habit, but it also becomes our way of doing things. It becomes so strong that it becomes a guiding star in whatever we do and how we do. It becomes so ingrained and so obvious one day that even an outsider can “see it”. This “it” is what I call the “Culture” (I am sure, there are better definitions available in books or internet ).
Every organization has a life of its own. Over years of operation, it becomes like a living being. It can be personified in the way it communicates, behaves and does things. In a word, it is “culture” that makes an organization stand out in the crowd. Its culture makes the difference in its becoming a “good” organization or a “great” organization.
Every kid goes through culture lessons of the family from the parents. When I was young, my parents used to tell me to choose friends with care, from good cultural background. It seems to be so important, almost like a measurement criteria of a kid’s would be friend! Not that a kid is technically equipped with choose friends with such finesse, but the lessons to catch the “good cultural traits” in a person were unforgettable!
If you look at IBM’s website, there is a printed “Culture statement” like the following:
IBM has a performance-based culture that talented people find very attractive. Employees share a real sense of community. We work in a culture that prizes intelligence and innovation. You will find that you really are working with some of the brightest and the best people around in a company that has complete trust in you and your capabilities.
I was in IBM for three years from 1998 December to 2001 December and experienced a lot of the above mentioned cultural traits along with other “hidden traits” which only an employee will know. There may be slight various in the last 6-7 years, but then cultural aspects don’t change drastically over the years for a large behemoth like IBM. The traits also differ slightly from city to city and even country to country. I traveled to various offices of IBM, my base offices in Bangalore and others in Chennai, Mumbai and Delhi. I also noticed zonal cultural variations when I closely interacted with IBM-ers of Australia, Singapore, Thailand, USA and Great Britain.
A common thing that however struck me in most of the conversations, particularly with senior IBM pros, is that, they are all very business like. Something that I termed as extremely lifeless during my early days in IBM, particularly as I was coming from a very vibrant, young and lively atmosphere of Tata Consultancy Services. I used to find the IBM characteristics as mature and business like, almost too robotic for my comfort. But then the success of a giant depends on mature culture – and these traits were even visible in the processes of IBM.
Right in the 1st week of joining IBM as the Business Partner program manager, I was sitting in the round table of Services strategy discussions, accompanying my first boss in IBM, and other department heads with Pawan Kumar, The IBM India president. Pawan was one of the big shots of nineties in the IT industry and was a big gun in TCS before he joined IBM. In TCS we would not dream of calling our CEO Ramdorai by first name. Despite the youngish charm of TCS culture, the TATA flagship IT company had this aura of royalty about it.
Desperate to create an impression in my first meeting, I had an extremely valid point to make my maiden entry into the discussion. I looked at Pawan and started enthusiastically with “Sir, I think…”, a few words and he nodded kindly at me, said “Pawan!” In IBM, ever one is called by first name, even a fresher calls the bid boss by the first name.
This points out to an open culture, which is partially true in IBM with standard red tape arrangements as in any other giant organization. Open culture is something which lot of companies preach and practice – but in IBM, as I found out through my experiences, it also talks about a western concept of “human value” - that whether you are young or old, experienced or not, a GM or a trainee – you are respected as a human being first and everyone is equal in that respect. A very simple point – so simple, that we almost overlook it. So who says office culture cannot influence you!?
The Order taker arrives nicely dressed up as the sultan’s chief advisor and proceeded to e explain the cuisines and advise us in our menu selections. As the Sultan’s advisor left with the order, a musician duo approached us and asked us if we prefer to listen to a short version of Darbari Kanada Thumri while we wait for our dinner. Without going down to the details of the experience (oh yes, the food was out of this world too!), I must admit I just loved the experience. A manager approached us as we were waiting for our bill and chatted on the service and the cooking in general and explained that his restaurant is always striving to find new ways of customer satisfaction and of course no one can give him better tips that customers like us! I made up my mind to visit there again and tell my other friends how different this whole experience was.
Sounds familiar? I am sure all of us must have faced similar experiences in day to day situations and get awed by the way some people give words like “customer satisfaction” and “customer care” a new definition. What does it take to make it happen? Customer satisfaction is as simple as doing things for customer in a way that satisfies his needs and exceeds his expectations - which is the surprise element makes him come back – and more surprises you throw at him, more he comes back to be pleasantly surprised! Easy! This is human psychology and the customer is a human too! And finally the act sums up in cross checking with him (feedback) whether he is impressed. We know all this. It’s all in the book, nothing new! But do we always do it? That’s another story, right? So why do we miss the bus sometimes? What is missing?
I noticed as I was coming out of that restaurant in Kolkata, and I saw a small wall hanging the wall beside the exit gate. As the all-mush-Sultan’s Darbari attendant was opening the exit door for us, I quickly strained my eyes to read the wall hanging. It said “We care for our customer and we do it by practice”!
The word “practice” hit me. Something that we believe in and do by practice over and over again becomes something deeply rooted in us. An idea or a strategy doesn’t become a reality unless it is backed by a sustained action which is practiced, perfected and habitualized. Not only it becomes a habit, but it also becomes our way of doing things. It becomes so strong that it becomes a guiding star in whatever we do and how we do. It becomes so ingrained and so obvious one day that even an outsider can “see it”. This “it” is what I call the “Culture” (I am sure, there are better definitions available in books or internet ).
Every organization has a life of its own. Over years of operation, it becomes like a living being. It can be personified in the way it communicates, behaves and does things. In a word, it is “culture” that makes an organization stand out in the crowd. Its culture makes the difference in its becoming a “good” organization or a “great” organization.
Every kid goes through culture lessons of the family from the parents. When I was young, my parents used to tell me to choose friends with care, from good cultural background. It seems to be so important, almost like a measurement criteria of a kid’s would be friend! Not that a kid is technically equipped with choose friends with such finesse, but the lessons to catch the “good cultural traits” in a person were unforgettable!
If you look at IBM’s website, there is a printed “Culture statement” like the following:
IBM has a performance-based culture that talented people find very attractive. Employees share a real sense of community. We work in a culture that prizes intelligence and innovation. You will find that you really are working with some of the brightest and the best people around in a company that has complete trust in you and your capabilities.
I was in IBM for three years from 1998 December to 2001 December and experienced a lot of the above mentioned cultural traits along with other “hidden traits” which only an employee will know. There may be slight various in the last 6-7 years, but then cultural aspects don’t change drastically over the years for a large behemoth like IBM. The traits also differ slightly from city to city and even country to country. I traveled to various offices of IBM, my base offices in Bangalore and others in Chennai, Mumbai and Delhi. I also noticed zonal cultural variations when I closely interacted with IBM-ers of Australia, Singapore, Thailand, USA and Great Britain.
A common thing that however struck me in most of the conversations, particularly with senior IBM pros, is that, they are all very business like. Something that I termed as extremely lifeless during my early days in IBM, particularly as I was coming from a very vibrant, young and lively atmosphere of Tata Consultancy Services. I used to find the IBM characteristics as mature and business like, almost too robotic for my comfort. But then the success of a giant depends on mature culture – and these traits were even visible in the processes of IBM.
Right in the 1st week of joining IBM as the Business Partner program manager, I was sitting in the round table of Services strategy discussions, accompanying my first boss in IBM, and other department heads with Pawan Kumar, The IBM India president. Pawan was one of the big shots of nineties in the IT industry and was a big gun in TCS before he joined IBM. In TCS we would not dream of calling our CEO Ramdorai by first name. Despite the youngish charm of TCS culture, the TATA flagship IT company had this aura of royalty about it.
Desperate to create an impression in my first meeting, I had an extremely valid point to make my maiden entry into the discussion. I looked at Pawan and started enthusiastically with “Sir, I think…”, a few words and he nodded kindly at me, said “Pawan!” In IBM, ever one is called by first name, even a fresher calls the bid boss by the first name.
This points out to an open culture, which is partially true in IBM with standard red tape arrangements as in any other giant organization. Open culture is something which lot of companies preach and practice – but in IBM, as I found out through my experiences, it also talks about a western concept of “human value” - that whether you are young or old, experienced or not, a GM or a trainee – you are respected as a human being first and everyone is equal in that respect. A very simple point – so simple, that we almost overlook it. So who says office culture cannot influence you!?
Thursday, November 6, 2008
Typical Product development Challenges and Global Resourcing as an emerging opportunity
Global product companies or Independent Service Vendors (ISVs) are always under performance pressure as would any of us in our respective jobs. They strive for market expansion, increased product features and new product ideas and face the regular constraints of decreasing profitability, increased competition, dearth of resource and skills and rising costs with simultaneous pressure to upgrade and widen product offerings while using fewer resources.
Product-development planning remains crucial to organizations' survival.
Some key challenges (and hence success factors) are as follows:
Development Speed: Faster and faster is the mantra of product development. One way to hasten development speed is through digital design, analysis and collaboration tools to get products to market faster. Using collaboration software, file-sharing software and more, engineers can transform ideas into digitized virtual designs for testing and viewing a new product in three dimensions, in months rather than years.
Platform Flexibility: Every product guru will acknowledge that a key success factor of a product in the market is its platform flexibility. This results from using modular product architecture to provide more product variety to customers. Computer aided design and engineering tools permit easy reuse of already-completed design files. All these files make product design much more efficient, cost effective and accelerated than ever before.
Complexity Management: A product stands apart from an application in its complexity. It involves engineering complex systems through analysis of interaction networks. Research has resulted in network modeling methods to examine a network of interacting elements that are in complex systems being developed. The challenge of engineering complex systems with many components, sometimes called systems engineering, remains a key success factor.
Customer Involvement: Involving customers to improve the product features and user experience is an open secret but perhaps pose the biggest myriad of challenges to a product developer. Some companies are using the order information about what features, components or configurations customers are ordering and are interested in, and they use that in real time, or as quickly as possible, to reconfigure the next generations of the product. Paying attention to these trends can help managers and design engineers plan their product design processes and achieve their goals with higher efficiency, lower cost and less time to market.
Outsourcing and Offshoring: Finally, the biggest challenge remains as optimizing in-house skills, supplier skills and capacity, international operations and new markets. Sometimes outsourcing saves considerable cost and sometimes a little cost, but more importantly, they're actually taking advantage of global product development networks, largely to access new markets in places and leverage global talent pools. Let us look at the outsourcing opportunities closely.
Modern communication tools and the Internet have reduced the need for product development partners to be geographically close. Indeed, product development is increasingly being divided into parts, created in multiple centers around the globe, and brought back together for integration and testing. The ability to succeed at global project management is the key challenge in this model.
As the challenges grow in the face of global inflation, strengthening currencies, slowing economies, dried up venture funds so will be the opportunities, to springboard ahead of competition by globalizing. Two immediate channels to bring in the advantages of globalization are building captive centers across the globe and the other being outsourcing. Both have its pros and cons, but given the scale of expansion and flexibility, outsourcing is well acknowledged as the greatest opportunity in the globe for the entire product engineering ecosystem.
The opportunities using outsourcing, leveraging local presence of partners, 24x7 development and support centers, multi-dimensional skills and matured processed and best practices, are fairly known as follows:
At this stage the founder(s) start pondering about their next step. Must they exit ? If so how ? Should they take the company public or should they sell the company to a larger player. Should they step back from the company and let professional management take over completely? The answers to these questions decide the path which sometimes leads them to the beginning of their journey once again i.e. to start another product company.
a) Skill leverage
b) Speeding up time to market
c) Global market expansion
d) Superior Customer support
e) Enhancing product development processes
f) Localization benefits
The emerging best practice for software development is to decouple product design and development (along with testing and support) elements in the value chain. The life cycle of product development is increasingly being divided into phases that require internal expertise (and value-adding) which is essentially in product definition and design phase where as steps that are highly commoditized include development, testing and support.
The division of responsibilities between IT personnel and outsourcing staff is a critical factor in the success of the project specifically and the outsourcing relationship generally. Moreover, outsourcing vendors have made tremendous advancements in the metrics for quality and investment that drive greater efficiency into the overall process.
Offshore is usually regarded as a tool for labor arbitrage. However, it has its hidden benefits like higher quality and development discipline of the “right partners” which lead to greater efficiency and productivity levels that are sometimes superior to the in-house engineering organizations of ISVs. Moreover, during the coming years, outsourcing vendors will expand further into the value chain of product development. Additional expertise are emerging to dominate emerging technologies (e.g., Web2.0) and develop deep vertical expertise.
Let me use a brief Innominds case study here to bring out a product engineering story using the global resourcing model.
An Innominds Case Study
A Bay Area company develops and sells a compatibility server, which is an affordable and high-performance relational database that is compatible with popular databases. The Compatibility Server enables applications to run against consolidated databases with minimal to zero rewriting. This compatibility server helps customers who are looking for reduced operational expenses on licensing, maintenance and hardware, reduced complexity by consolidating multiple database and single/simple data access and ease of migration.
With its flagship product of a database server, the company was getting into a high level competition zone. The business situation demanded aggressive scale-up and a high performance next generation product. In this scenario, the need of the hour was a product engineering partner to design, build and test the features of its compatibility server, leveraging the economies of scale and global talent pools. The requirement was to build an extended offsite engineering and QA team with the expertise of building database kernel and drivers, which will co-develop, test and release the product for multiple platform certifications.
In Innominds, the company found that competent partner and an expert in building complex database servers and applications. Further more, utilizing its brand pull, Innominds attracted the best available talent from the industry and technology schools that was one of the primary success factors of the outsourcing engagement.
Innominds started building high performance development and QA teams for database compatibility, database server internals development and quality engineering for the customer in early 2007. Agile ramp up of the team and executing the knowledge transfer flawlessly using innovative training methodologies in a blended offsite-onsite model was the key factor to begin the engagement with quick wins. Innominds brought in leadership in database internals and cross experience in multiple RDBMS and connectors that created the new features in the compatibility server.
Innominds created long term value to the customer in mitigating maintenance and QA risks and reducing costs by remote management of the server regression beds by more than 45%. The team that Innominds created utilizing a global pool (there are talents from outside the country as well, namely from Vietnam!) is a pillar of the customer’s engineering success and market growth today.
To conclude, today’s nextgen software products are evolving with a distinct global flavor. The products are developed with the globalization model already deployed by large companies like Microsofts and IBMs, but are extending down to regional and specialty players — enabled by offshore outsourcing. Offshore vendors are increasingly being involved in architecture, development, and deployment, ranging from embedded products to software and hardware design. Products that are not born out of the Global Sourcing model will lose its competitiveness in the coming years.
Published in
1. HYSEA Infowire, 18th issue May 2008
http://www.hysea.in/18infowire-article2.htm
2. Smart Techie October 2008 edition
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