Manufacturing To Services ...

I was seeing an interview of Malvinder Mohan Singh on tv yesterday, when i suddenly realized ... this is probably one of those transformations which one should look at ... the way they have transformed the company. Actually, it would be incorrect to say company, because they did sell it to Daiichi Sankyo, but the transformation in the businesses they are into is quite large, and seems to have been managed quite well.

Till some time back, the Singh brothers were managing Ranbaxy, primarily a manufacturing company, also into retail to some extent. Once they sold their stake to Daiichi Sankyo, they seem to have moved into businesses which are related, and yet, are quite different from the classical manufacturing business that they were into earlier. So, from being into manufacturing pharmaceuticals, they have moved into healthcare, diagnostics, and a host of other businesses. The point is, the transformation has been from being into manufacturing, to being into services. Whether it be Fortis, or Religare, the change has been quite huge. Now, i am not aware of how this has been managed on the inside, but this could be an interesting episode from which we could learn about how such transformations can be successfully managed. Anyone who would like to comment on this, is most welcome. I am sure there would be a lot to learn.

Poll ...

Been a few days ... i ran a poll on the blog here. The idea behind the poll was simple. What do we think is the way forward for KM. Why ask this question? Simple ... the way the realm of business is moving today, it seems that this question is a natural corollary. But, that wasnt really the reason for the question. The question came up from the more basic concern. More and more, KM practitioners are coming round to the idea that KM is not just about documents. There are a few organizations which i have interacted with, which seem to disagree, but these are not large in numbers. This implies that the idea of KM is surely moving away from content to collaboration. Or, the way i like to put it ... from codification of knowledge, to a scenario where KM is the facilitator for the flow of knowledge. This seems to make sense, because knowledge is primarily created by its flow. There was a poster i had seen ... It went ... If i have one idea, and you have one idea, and if we share those ideas, together, we now have four ideas. Makes sense ... at least in the context of shared knowledge. We agree that knowledge grows exponentially when it is shared. So, this is not a question anymore. Or, so i think.

The question then comes up is, what next. And this is where i could come up with three scenarios ...

1. The next big thing in KM could be the drive of KM towards Web 2.0, more participative, more interactive tools. I am not trying to be restrictive here, and used the term Web 2.0 to avoid death-by-jargon. You could include here virtual worlds, semantic web, or anything similar that you like. The idea is that the nature of tools going forward is participative.

2. Or, the next big thing in KM could be the dovetailing of KM as a function, or a discipline with other disciplines in the organization, so the two can function together to deliver greater value to the organization. One example that came to mind was that of innovation. What some organizations refer to as Non-Linear growth. Agreed, plenty has been written and discussed about the idea of innovation. But, the idea here is not to do that in the first place. Rather, the question is, would KM dovetail to a function like Innovation, or Ideation, to become part of the new-idea/innovation value chain? After all, innovation is knowledge-driven at its basic level.

3. Or, the next big thing in KM could be KM becoming an operational excellence tool, one of the tools available to oeprational managers to drive excellence in sales and delivery processes.

The results were quite expected. Web 2.0 got 45% of the votes, while Innovation got 36% of the votes, and Operational Excellence got 18% of the votes. What this means is that KM is far from being a hygiene factor, and we are yet to see the evolution of KM into something different. That going forward, KM would tend to drive the idea of conversations in the organizations to the next level, and at the same time, could move towards being a tool which can be leveraged for driving the next level of change for organizations. Actually, this reminds me of a post by Luis Suarez (cant seem to locate it!) where he mentioned the idea of a CKO being re-christened the Chief Conversation Officer. this also brings home the point that there is expectation that the contribution of KM as a driver of next-generation change is high, and that KM can be expected to play a meaningful role here.

This, actually, stands to reason. With the tools of social computing being more and more felt within organizations, there are changes (howsoever slight) in the way organizations are accepting the fact that knowledge, and expertise, are in fact disaggregated in nature, and that to deliver value, organizations need to not just recognize this, but also tap into this, by tapping into the distributed knowledge base, and also the networks that naturally develop withn an organization around this distributed knowledge base. True, this change is far slower than what a lot of us expect, but that is not surprising either, given the shift in dynamics that this seems to signify. Having said that, however, this is something which seems to have begun. And this, probably, is the large part of the change which organizations are looking at.

Business Confidence ...

Today's ToI carried an article about falling inventories with Indian businesses. This is rather heartening. If we look at this carefully, there could be two reasons for this.

One, businesses scaled down orders which they placed on their suppliers, and this affected entire supply chains. Two, that demand is picking up. If its the former, then it becomes clear that businesses took the slowdown far more seriously than they should have. Assuming slowdown in demand, businesses would have adjusted demand forecasts, and this would have led to scaling down of orders placed on suppliers, who in turn would have done similarly with their suppliers, all the way through the supply chain. If the latter, then this is indeed very heartening, because this means that demand is rising, which is a healthy sign. However, even if the former, this is a healthy sign, because what this means is that business confidence was lower than what it should have been.

A Story About Recession

This is not original, but the story strikes a chord somewhere.

This story is about a man who once upon a time was selling Burgers by the roadside. He was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio. His eyes were weak, so he never watched television. But enthusiastically, he sold lots of Burgers.


He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up. He ordered more and more raw material and buns and sold more. He recruited more supporting staff to serve more customers. He started offering home -deliveries. Eventually he got himself a bigger and better stove. As his business was growing, the son, who had recently graduated from college, joined his father.

Then something strange happened.

The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."

The man thought that since his son had been to college, read the papers, listened to the radio and watched TV. He ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down the his raw material order and buns, took down the colorful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs. Very soon, fewer and fewer people bothered to stop at his Burger stand. And his sales started coming down rapidly and so did the profit. The father said to his son, "Son, you were right". "We are in the middle of a recession and crisis. I am glad you warned me ahead of time."

And this is a question we must pause and ask ... are we talking ourselves into economic recession? Is it, in some way, becoming a self-fulfilling prophecy? I am not an economist, but i feel that maybe ... just maybe ... and this is not to say everything is hunky-dory with the economy ... we are creating the economic scenario by talking ourselves into it? True, sentiment is bearish, but somehow, the bad news makes front-page news, while the good news you must look for, and consider a job well-done if you actually manage to find it. In other words, just as there was a bubble of unrealistic expectations, are we seeing an opposite phenomenon, again made of unrealistic expectations?

Knowledge And Being Liberal ...

I have written before about how you never know what idea you may get from where. And this is something i have written about before. Though, i am not referencing a link here, because i cant find it. Which is one of the reasons i have been writing about the necessity for someone to come up with search for opinions, rather than just keywords (or maybe just aggregators which are rather more beneficial than the current ones) ... this would really help make much more sense out of the blogosphere. One of the reasons being that the way the blogosphere is today, and the way i see it going, is made up of a number of voices, which rather makes the signal-to-noise ratio rather low, the way things stand. I know, there have been a number of pieces written about this, but i just wanted to add this.

But i am digressing from what i wanted to tell. As i said, you never know what thought could come from where. These days, i am reading a rather interesting book (well, you may find it interesting, or not, depending on your personal beliefs ... point is, i find it interesting ... you may not ... if you dont, or if you do, please do tell me about it) titled The Templar Revelation. Of course, i am not writing this to write my opinion about the book. Allow me to keep this to myself, at least for the moment ... let me think if i want to write about this or not, at a later time.

What i am writing about, though, is a sentence in the book, which got me thinking ... no, this sentence has nothing to do with the subject which it triggered my thoughts towards. At one point, the authors say ...

A culture that encourages the pursuit of knowledge tends to tolerate radical new thought.

Now, i am not looking at the context in which this sentence is written ... its not relevant, and thats one of the points i am trying to make ... something from a particular context could actually get you thinking about something which may not be related at all. And what this got me thinking about is whether a culture of knowledge is tolerant, or whether tolerance leads to a culture of knowledge-acquisition? And i am not able to come up with an answer (simply because one moment i think that pursuit of knowledge leads to tolerance, and the next moment, on second thoughts, i feel like changing my opinion ... so, maybe, sometime soon, i will post a poll on this ... please do let everyone know your opinions then ... which will be soon, as soon as i think i can get a clear picture from the current poll, that is).

Now, even though i am not able to come up with an answer, the fact is, there is a relationship between the two. Now, if we look at this relationship in the context of organizations, and try to examine this relationship, we find, at least from the interactions i have with a number of organizations, that this relationship does hold good. What this means is that in an organizational context, culture or atmosphere which encourages the pursuit of knowledge is more tolerant of ideas which are more radical (or, shall we say, ideas which represent departures from the established norms), or vice-versa. And this, to my mind, is a critical ingredient to innovation ... i dont claim to understand the process of innovation too closely, but i do understand that innovation is about the creation of new thoughts, and the pursuit of these thoughts and ideas to their logical conclusion, whether that leads to the introduction of a new product, or entry to a new market, or to nothing at all. This, of course, has to be tempered by considearions of ROI, but that is expected, isnt it? Senior managers of any organization are not runnina laboratory, after all.

The point i am trying to make, however, is that one way or the other, there is a relationship between knowledge and innovation ... question is, what is this link? Simple ... if we look at it carefully, all innovation is directly or indirectly knowledge-driven ... whether it be knowledge about customers, or markets, or products, engineering, or business processes ... and in turn of possibilities of creating greater value to customers by changing some of these.

Goldratt On Economy ...

At a time when there is concern about the state of the economy, there was a news piece i read which mentioned that things might not be as bad as they seem (cant seem to find the link, so i am not referring to it here). Add to this, there is a very interesting newspiece about an economic upturn ... and, coming from someone as notable as Eliyahu Goldratt, one would sit up and listen.

Goldratt, to my mind, is one of the few business thinkers who go mre by common sense than by business theory. And, this reflects in the article i mentioned. Something i have been saying to friends, that the consumption of a billion people is not going to change drastically. Yes, there are going to be changes, definitely, but would these changes be as drastic as they have been made out to be? I dont think so. Even if people are to change their lifestyles, and reduce consumption, this takes time, and is not something which happens overnight. And if consumption is not going to be drastically altered, surely, the fortunes of companies which are linked to this, shouldnt change drastically either.

Lets look at it logically, as Goldratt does in this newspiece ... as fears of a slowdown continue, retailers reduce orders on manufacturers, who see demand going down, and they in turn reduce orders on their suppliers, and so on, down the value chain. What happens in this process is something well-documented ... the bullwhip effect. The fluctuations increase as one moves down the value chain, and this amplification is seen as proof of slowdown. Which would explain the disproportionate change in demand for component manufacturers, as compared to change in retail demand. Now, i am not an economist, but having studied supply chains, this logic rings a bell.

Cause And Effect ...

I have long believed, and continue to believe (unless someone can convince me otherwise) that innovation is best when it is broad-based. No, i am not saying this with the benefit of hindsight, but rather, from the many Rum and Water consumed with colleagues (primarily Old Monk, but then, i am no connoiseur ... did i get the spellings right there?), cribbing about the so many stupid things which the senior managers keep doing from time to time. No, i am not taking names ... i am still good friends with most of them, so dont even bother to ask, my dears! Fact of the matter is, if you ask the many people working on the field about the things which the organization is doing wrong, you will be sure to get answers ... plenty of them! Of course, you got to be careful how you ask, though. Ask it too stiff-collared, and you might not get any answers whatsoever.

So, whats the point, i hear you asking. Stifling a yawn, maybe? Well well ... the point is simply this ... that when it comes to innovation, the ideas are out there. Legend tells of legendary innovations the creation of which is the stuff of legends (my take on Kung Fu Panda, which, by the way, if you still havent seen, you probably must ...), so let me not interfere with the legend. But the point is, so many of the innovations we see around us, have come from, at times, stupid ideas. Which is something i believe in strongly. That at the "bottom of the pyramid" is where the brilliant ideas exist. For another similar idea, read my previous post. And i believe, that social computing is a fabulous tool to tap into this vast treasure of ideas which is readily available, only needing the possibility of a treasure hunter coming and discovering the treasure, and generating value from it. In other words, the one most important aspect is that people have the ideas, and these ideas are based on knowledge. Most of these ideas come from very intimate understanding of work, organization, market, customers ... only thing, the organization must be willing to invest the energy required to listen.

And probably the most fabulous tool till now to enable organizations to listen ... whether to customers, or partners, or employees, is social computing. True, you have had discussion forums and similar technologies around for some time now, but then, i dont think they have been maningfully deployed. This is not to say that social computing tools by themselves are a magic pill, which implies that they too have to be meaningfully deployed. In addition, they are, at best, the ears ... the organization also needs to be build up the entire apparatus, from the external auditory meatus, to the tympanic membrane, the cochlea, the cochlear nerve ... all the way to the brain (click here for the diagram). Without this, all the organization has is the proverbial "deaf ear".

Having said that, a question which i am asked quite a few times is whats the cause, and what effect. Can the success of social computing lead to greater participation, or could greater participation lead to the success of social computing. It is obvious that the latter it is, but what is not so obvious is that the former is equally valid. In fact, if we look at it as a circular phenomenon, we would be able to understand that social computing cannot succeed without enhanced participation, and enhanced participation wont come about till social computing is seen as a success (why would someone waste their time contributing to a platform which is not too widely accepted?). The answer is give is simple ... Value. Value creation, and the perception of this, is the way to break this circle. There are a number of organizations which have done it, and a lot of organizations which have struggled. But the fact is, the possibilities are enormous.

A Conversation ...

You must all be following the news, and all the goings-on at Satyam. Again, i am not a management expert, so better for all that i dont comment on that and expose my ignorance. Having said that, i would say that equating this to large-scale corruption in Indian industry would be quite similar to speculating about large-scale corruption in American industry in the wake of Enron. Which, to my mind, is not something which is reasonable.

Coming now to the point of this post ... a few days back, Satyam stock was seeing quite a bit of fluctuations in trades on the stock exchange. I was having a talk with my friend, Arvind Dixit, and was asking him who are the people who are buying Satyam at this stage. I wont write here about his hypothesis, but an interesting thing that he mentioned ... something to the effect that if it was a brick-and-mortar company, it would have been easy to figure out what should be the fair value of the Satyam stock, but because the nature of Satyam's business is knowledge-based, its very difficult to determine the fair value of Satyam stock.

I would see this based on two considerations:

1. It is inherently very difficult to determine fair value based on intangibles.
2. Since knowledge is the main ingredient of the business, and this knowledge is inherently carried by people, it becomes all the more difficult to determine the fair value, because as people leave, they take away a large part of the resources of the organization with them.

And this is what i wanted to write about ... the fact that it is very difficult to determine the value of knowledge to the organization, or to society at large. However, it would not be correct to assume from this that there is no value (nobody would agree even if you said that), but the fact is, while there are exhaustive mechanisms for valuing tangibles, there is still little to value intangibles. One could estimate value based on the projected revenues which could be generated based on this knowledge, but this at most a proxy measure.

Global Financial ...

No, i am not a finance expert. Far from it, actually. Which is why, expectedly (for those who know me), i have not written a single blog about the way the financial markets have turned out over the last few months. Well, this article i read (ok, so i read this maybe two weeks back, but still ...), got me thinking, and this was a train of thought i had to blog about.

I came across this article by Thomas Friedman about Time to Reboot ... Thomas Friedman has raised a question about something which i havent been able to understand. To quote ...

we’ve fallen into a trend of diverting and rewarding the best of our collective I.Q. to people doing financial engineering rather than real engineering.

And this is something i havent been able to understand. Why is it that returns are not too closely related to the value one is adding to society? And when i say value, i am talking about real value, not something notional which is great as long as its going, but then, one morning, vaporates with the news. Why is it that people working on technology, whether it be nano-technology, or solar probes are not the ones drawing the top salaries?

It has to go into training teachers, educating scientists and engineers, paying for research and building the most productivity-enhancing infrastructure

Somehow, the business world has gone into a scenario where notional concepts are far more valuable than real concepts. Like, making money out of money becomes more valuable than making money out of value add. As i had referred earlier to an article which was about how some businessmen in smalltown India are making hay in the market downturn ... its all about basic common sense.

Some Thoughts ...

They say that when people are low, they can be cheered up by two things ... humour, and sex. For the latter, this is not the right place to look (hey, i am sure you already know where to look ...), and as far as the former goes, here's a glossary of some of the terms from everyday use, redefined by the current financial crisis ... not original, though ...

CEO: Chief Embezzlement Officer

CFO: Corporate Fraud Officer

Bull Market: A random market movement causing an investor to mistake himself for a financial genius

Broker: What the broker made you

Standard and Poor: Your life, in a nutshell

Stock Analyst: The idiot who downgraded your stock

Yahoo: The exclamation when you sell it at $240

Windows: What the sucker who bought it at $240 jumps out of

Institutional Investor: Last year's investor who's now either in the nuthouse, or busy expatriating funds from India (a nut, any which ways)

Profit: An archaic word no longer in use

On a rather less humorous note ... something which i havent been able to figure out ... not rationally, at the least ... why is it that when the Dow Jones drops by 1%, the Sensex (with or without the Saas and Bahu), drops by 10%? Whats the amplifying all about? How is it that the fundamentals of companies have changed overnight, so much so, that a lot of companies lost 75% of their market capitalization? Or is it just that everyone is going by what their neighbour (and his uncle) is doing?

ToI ran an article today, about Hapur investors making hay in the market mayhem ... a must-read for anybody who thinks he's smarter that his neighbour (or his uncle). This very nice article goes to show that Hapur knows much more about Finance than Wall Street does ... and, another thing ... that common-sense makes more sense than most of the smartest folks around. Way to go ...

On Marketing ...

Today, we have a stage where the content that people access is tailored to their requirements. With the web 2.0 explosion that we are seeing today, a user has the option to access more and more of content which is relevant to them, without having to go through lots of content which might not be of interest to them. Search has added to this, and given the way the activities of users can be tracked, companies are more and more (or at least, they need to ...) tailoring their offerings to meet the needs of customers.

The other day, however, i came across something quite different. Here was this advertisement for a Gelato chain (no, this has nothing to do with the flavours, which actually are very nice) ... They had an offer on a particular flavour. So, whats new? Nothing, actually. The advertisement mentioned all the places in Mumbai where you could go and avail of this offer. Again, whats unusual? Nothing ... except that i was in Bangalore!

This is the kind of marketing approach which companies should avoid ... today, there is so much information which is available, and so many marketing offers which are there, too ... more often than not, people dont even read them. How many, for example, read the inserts which come along with the newspaper? Not many ... which means that they are not having the desired impact. Organizations need to come up with offers customers need, rather than offers organizations need.

Executive Blogs ...

There are quite a few senior executives who are blogging. And, more are joining the bandwagong. I came across an interesting post about executive blogs, and the things you might want to think about before you launch on this.

Interesting reading ... there is, however, the other side of this, which i wanted to write about. First, when you ask your CEO to write a blog, and encourage customers to comment on it, be prepared to hear what you dont want to. More often than not, you will have customers writing about how the product doesnt work, and how they think the company is over-charging, etc., etc. ... you know, pesky customers! Of course, a mature organization would be able to hear these, without flinching. Acting on these is another thing, though. When folks write comments on a CEO's blog, they would think that something would happen, based on their feedback. When not much happens, you would only get more disappointed customers. This is to convey the impression that web 2.0 is a double-edged sword, and this must be grasped before embarking on this journey.

Maybe a better idea would be to treat web 2.0 as more than a marketing tool ... as a means for communicating with a wide spectrum of audience ... and this takes on a different shape. Why not have the Chief Executive, and other managers blog about the things the organization is doing, write about some of the recent wins, losses, strategy, etc. ... things which could be of more interest to employees. Thing is, most senior managers dont see the value of this, and the kind of benefits these could bring to the organization. Though this is where web 2.0 has the potential of generating far greater value, than as a PR tool.

Study In Contrast ...

The other day, i was flying Air India, and was reminded about the sheer contrast in the working style of companies operating in India. Let me write about this ... one of them, Air India ... solid government of India carrier, and the other, Airtel ... shining example of private sector enterprise.

Air India, when you walk into the airport, is not the most shining check-in counter. The check-in can be quite an experience ... they somehow havent quite gotten the hang of checking in maximum number of people in the minimum amount of time, though the check-in counter people can be nice, or surly depending on their mood. Airtel, on the other hand, is suave, swanky, the perfect marketing machine ... your interactions with Airtel will get you thinking about the amazing effeiciency, etc., etc. ...

Walk behind the facade, and the story is quite different. While Air India gives you good, rock-solid service with a smile within the aircraft (coupled with some of the smoothest landings you could get, and food which is excellent, too, at least compared with some other airlines ... Kingfisher comes close ... and, i remember reading an article by veteran journalist Jerry Pinto, comparing an experience he had with Virgin, and with Air India ... few years back, though i cant find a link to it!), when it comes to Airtel, the service ends at the front-end. Behind the facade, its all about dropped calls, no network coverage (go anywhere, do anything, except in the heart of Delhi, Kolkata, Chennai, Mumbai, Bangalore ...), and a call centre which has perfected the art of providing no service, and only apologies for lack of it.

Go, Air India!