"Busi-Blog"

Too many cooks, spoil the broth!

2009-04-28T04:56:00.000-07:00

Most of us have heard this common addage. How does this apply to business? This could be paraphrased in business as -- too many projects at the same time can spoil the work.

As a business is started or is growing, it is important for the leadership to realize that "too much dilusion" can be a problem. Being involved in too many projects? Pursuing too many projects?

Pursue something that you are fundamentally good at. Take a look at the inventory of skills and see what do you do best? What are you passionate about? Would you do this task even if you do not get paid?

All of these questions bring a set of core projects/tasks to light. This is what the management textbooks often refer to as the "core competency".

What is your core competency?

Greatness v/s Mediocrity

2008-04-13T20:23:00.001-07:00

A few months ago I watched an IMAX show about NASCAR. The narrator made a comment that has stuck with me since then.

“The difference between greatness & mediocrity is 2/10th of a second”.

To measure 2/10th of a second, I am sure that one would need precise time measuring equipment. Regardless here are some of the key observations that would apply to businesses everyday. All participants started with the same goal in mind. To win the race was on the mind of everyone. However as the first car passes the finish line, it is the winner.

There was probably only hairline differences between the 1st place, and the 2nd place. But that was the striking difference between greatness and mediocrity.

Most businesses like every other business, start with a goal in mind. They compete in the market place everyday, and as we know the competition is intense. Everyone does not win the race. Winners are clearly marked. As you progress toward your goal, understand that there is intense competition out in the market place. You have to be good all the time, or at least have a 2/10th second lead ahead of your competitors.

Here is a humorous illustration that I heard once that drives this point home. “A doctor and a lawyer are camping in the woods. Shortly they realize that they are being chased by a grizzly bear. As the doctor is panicking, the lawyer takes out his running shoes and starts to put it on. The doctor says, you cannot out run the bear. The lawyer responds, I know. I just need to out run you.”

Be creative, and strive to consistently stay ahead of your competitors.

Penny Earned v/s Penny Spent

2008-04-13T19:55:00.000-07:00

Most of us have heard the famous quote attributed to Ben Franklin, A penny saved is a penny earned. Along these lines, I want to look at a penny earned v/s a penny spent. Consider this example.

You earn $10.00. Of course you have some expenses such as rent ($4.00), supplies/groceries ($2.00), savings ($1.00), and incidentals ($2.00). Out of the $10.00, you have spent $9.00 and the remainder is $1.00. You can use this any way you want. Suppose your earning and spending pattern continues this way for a 12-month period, then at the end of 12 months:

You would have earned $120.00
You would have spent $108.00
The remainder is $12.00

This is what is known as the Cash Flow statement in business terms. Suppose what if you spend $11.00 per month, and you earn only $10.00. At the end of 12 months, you would have overspent $12.00.

In scenario #1 (earn $10.00 and spend $9.00) you have a positive cash flow of $12.00 at the end of 12 months. In scenario #2 (earn $10.00 and spend $11.00) you have a negative cash flow of $12.00 at the end of 12 months.

Ask yourself this. Would you as a person be able to continue living like in scenario #2? You may be able to exist in scenario #2 for a little while by offsetting the negative monthly cash flow using prior savings or borrowed credit.

The main point it is, you can not continue to live with a negative cash flow. Similarly to understand the actual health of a business, one of the key elements is to analyze the Cash Flow statement. If you run your own business, you have to watch your cash flow (I.e. Penny earned v/s Penny spent) and that has to be positive. If cash flow is positive, chances are that the company is in good health. (Note: A point of caution here is that a cash flow statement is “one” of the key indicators, and is not exhaustive on its own. There are additional factors such as the strength of the cash flow, the economic environment of the business etc. to get a better understanding of the company's health.)

Have you reviewed your Cash Flow statement recently?

Character

2008-04-01T19:09:00.000-07:00

Recently I was reading about some personalities in U.S. History, and these two people’s stories caught my attention.

John Hancock was the first person to sign the Declaration of Independence in 1776. Regardless of all of the assistance to the revolutionaries he was sidelined because of his “pomposity”.

Pierre L’Enfant was in the process of designing the nation’s capitol. However George Washington removed L’Enfant from the project because of his “prickly personality”.

As I was reading through the accounts about these men, I was really amazed at the impact that they had in shaping this great nation. It is an amazing thing that Hancock was the first person to sign the Declaration of Independence. It is a great document that has laid the foundation our country. Also, the fact that L’Enfant envisioned the capitol city is remarkable.

However, regardless of their significant achievements, both of these men were side lined because of their character. At times great people of talent & intelligence can be sidelined because of their character flaws.

A question to reflect – do I have any of those character flaws that forces people to sideline me? An aspect of leadership is inner reflection. What do you see when you look in the mirror?

No one is looking, now what?

2008-03-29T13:00:00.000-07:00

For the past few weeks, national newspapers have brought to light some major character flaws in highly powerful people. In one instance it was improper gift taking, and in the other it was improper relationships.

You hear words and phrases such as Ethics, Ethical frameworks, Moral Compass, Principles and so on when it comes to character. What does it mean to have character? There are various guidelines that give us guidance in this matter.

Laws & regulations. There are various laws and regulations that govern the business world. Anti-trust laws, Insider Trading, Back dating of stock options, Price fixing, Copyright, Trademarks etc, which are punishable by law.

Social & ethical norms. There are various social and ethical norms that govern the business world. Respect for people, Treating people with dignity, Covert discrimination etc., which may or may not be punishable by law.

Moral norms. There are various moral norms that tend to supercede business, cultures etc. Lying, Stealing, Unproved killing etc., may be both punishable by law and judged by the common public.

So in light of all this, what does character mean? My simple suggestion would be is asking yourself this:

* If no one is looking would you still continue to behave the way you currently behave?
* If you know that you will never get caught, would you still continue to behave the way you behave?

Some thing to think about and make a conscious choice to act appropriately.

The "Trojan" horse

2008-03-27T04:47:00.000-07:00

Most of us have probably read the story surrounding the Trojan horse. The kingdoms of Greece had joined hands to war against the kingdom of Troy. Troy was defending itself diligently and the war had been going on for ten years. Then, Odysseus came up with the idea of the Trojan horse, and the rest is history.

From a business perspective, Troy was a strong company, almost impenetrable. They were strong, vigilant, and always guarded their surroundings. For 10 years they put up a strong fight. However here are some insights to learn from their mistakes.

1) Analyze the situation from all possible angles - When they saw that the Greeks had “retreated” they were overjoyed. They did not know that the Greeks had just moved out of sight for now. As the business landscape changes, this is the time to be more vigilant and analyze why the landscape has changed. Ask yourself if the landscape has transformed or does it just look like it has changed?

2) Proof the information source – The Greeks left behind a person (Sinon) who gives the Trojans incorrect information about the wooden horse. In business, does the information you receive or read make sense? Ask yourself what does the information giver have to lose or gain?

3) All that glitters is not gold – Finally when the Trojans looked at the wooden horse, people reacted differently. Imagine the story if the Trojans had assumed that the wooden horse was a trick played by the Greeks. History might have changed. Things are not/might not be what they seem. Plan for the worst, and then work backwards. This is not negative thought process, but realistic analysis given the odd circumstances.

Are you ready to face the Trojan horse that might be waiting to destroy your business venture?

Obsolete

2008-03-05T19:05:00.000-08:00

Many of us have probably encountered this some time in our lives. There is that nice restaurant, and you try it out. It’s not your absolute favorite, but you could go back there some time again. You go back there after a few months or even years, and you do not find the restaurant at the place. What happened to that restaurant? You could say the restaurant did not make it. It is no longer in use, i.e. obsolete.

Obsolete does not necessarily mean a negative perspective. There are two aspects of being obsolete:

* Obsolete by chance
* Obsolete by choice

Coming back to the restaurant analogy, suppose if you knew that the restaurant would never make it because of some issues – the food is not good, limited selection, poor customer service to name a few. Based on all of these issues, the restaurant did not make it. It became obsolete, by chance. Regardless of whether the owner/management knew it or not, the restaurant did not make it because they were not diligent to remedy all of the issues. This is obsolete by chance.

Suppose the same restaurant had changed – better food quality, focused on better marketing, transformed their image, excellent customer service to name a few. In a sense the “old” restaurant is out of use, but with a conscious decision by the owner/management where there was transformation. There was radical transformational change toward the positive. The “old” restaurant became obsolete, and a new restaurant has taken its place. This is obsolete by choice.

If a company/business is striving to become "obsolete by choice”, chances are that their transformation is leading them toward a positive change.

Various aspects of a well run company

2008-02-28T18:38:00.000-08:00

Each well thought out corporation has a goal or vision that it would like to achieve. The very aspect of a goal/vision presupposes a situation that is less than (i.e. the current situation) the ultimate corporate goal or vision. This “current situation” is one end of the spectrum, and the “corporate goal” is on the other end of the spectrum. The following aspects are integral in moving the organization from the current situation toward the corporate goal.

Internal Analysis – This is also known as the strengths/weaknesses analysis where the corporate leadership looks introspectively within the organization. What are our strengths? What are our core competencies? What do we do well? Another aspect of internal analysis it to clearly understand the corporate weaknesses. What are our weaknesses? This analysis will also answer the question, given our current situation, are we able to achieve our corporate goal? Do we have the capacity?

External Analysis – This is also known as the opportunities/threats where the corporate leadership looks externally to determine how external factors such as the changing business environment, changing political climate, etc would impact the journey towards the corporate goal. If after the internal analysis is completed, and it is determined that the company has the strength and the capacity to reach out goal – what if the external demand shifts? A classic example would be a company that is very strong internally but manufactures an obsolete product or service. A through external analysis would reveal that based on the external factors, the corporate goal might not be achievable.

Business Level Strategy – Have understood the corporation internally and externally, what strategies are we going to adopt that will help us to achieve our corporate goal? At this juncture the corporate leadership has to decide how do we target our customers? What are their needs? How do we fulfill their needs for goods & services? How do we sustain a successful business model? How do we grow the business? How do we compete in the marketplace? It is important that the leadership understands the four generic competitive strategies – cost leadership; focused cost leadership; differentiation; and focused differentiation. Knowing what we know about ourselves (Internal Analysis), and knowing the market (External Analysis), how do we achieve the corporate goal comprises the business level strategy that the leadership needs to adopt. As such business level strategy is both clear & changing. Business level strategy cannot be a static closed concept. It is an ever-changing concept, and is highly dependent on the internal & external analysis. As the situation changes, strategy needs to be adaptable to achieve the overall corporate goal.

Technology and Business Level Strategy – As an illustration, I would like to visit Chicago from Minneapolis. There are various modes of transportation available – land (car, motorcycles, bus etc.), air (airplane, helicopter etc.), and water (boat/steamer via the Mississippi etc.). There might be some other exotic means – hovercraft; blackbird re-con aircraft etc. Of all of the options available most people might opt for either the car or the airplane. This is the philosophical question that needs to be answered with respect to technology. Knowing what we know about ourselves, knowing what we know about the outside environment, and having adopted a methodology (Business Level Strategy) what tools (Technology) would enhance our journey? This is critical because technology expenditures can be significant, and thus have to be carefully utilized in accordance with the business level strategy.

Strategic Leadership – The bedrock of all these important aspects is strategic leadership. A quote is attributed to Alexander the Great that reads, "I am not afraid of an army of lions led by a sheep; I am afraid of an army of sheep led by a lion." That probably brings together the importance of corporate leadership, particularly the senior leadership. It is virtually impossible to run an organization without strong leadership. The leadership is responsible for defining the overall corporate strategy/goal, and then energize/empower people to achieve the goal. Thus strategic leadership is the bedrock of all of these various concepts.

Business Plan

2008-02-19T18:50:00.000-08:00

Recently I watched a documentary on The Eiger. The Eiger is a mountain in the Alps of Switzerland. It was a story of a man who climbed to the top of the summit. Reflecting upon that story, here are a few insights.

(1) Vision – the project to climb the Eiger began with a strong vision of the future. The person’s vision statement was defined clearly and succinctly. The ultimate vision was to climb the Eiger.

(2) Planning & Preparation – how will the climb occur? Which route to take up, and take down? When is the best climate to make the ascend and descend? What are the risks involved? How do we make sure that we minimize all of the various types of risk? What types of equipment are needed? Who to go on the venture with?

(3) Execution – as the climb occurs, some things go as planned. Other things happen outside of the plan. How do we stay on course? Why should we stay on course? What is driving us to complete this venture?

It is very clear that climbing the Eiger is not an easy task. It takes all of these things for the climb to be accomplished. However, one thing is clear – as the party is reaching close to the summit, there is no one there to welcome them. The path towards the summit is lonely, narrow and treacherous. But the reward of accomplishing the climb is absolutely priceless.

The same principles apply to business ventures. Each person has a summit to climb. Regardless of how lonely the path is, how narrow the path is, how treacherous the path is – the reward is absolutely breath taking.

Vision / Mission Statement

2008-02-09T22:12:00.000-08:00

If you don’t know where you are going, you probably will not get there. As you set out on a road trip, you probably know where your destination will be. The destination is vital, so you can figure out a way to get there. This similar example can be utilized in business.

Vision – What is your final destination? What is the one superceding purpose in your life? What is the one superceding purpose for your company?
Mission – As you start the journey towards your vision, what keeps you going? Why do you keep on track?

These are probably some of the essential building blocks in guiding a person, and also a company. These have to be clearly defined while embarking on a business venture.