Archive for the ‘Strategy’ Category

“Competing Against Luck” – a book I read

May 6, 2017

I have not done book reviews, this is more like a cheat sheet or notes rather than an actual book review.

The author of this book is the famed prof. Clayton Christensen of HBS. He is a pioneer in innovation management and it is not an overstatement to say, he has dedicated his life towards this. He shot to fame earlier with the term “Disruptive Innovation” in the book “Innovator’s Dilemma”. He has been researching on the theory of “Job to be done” as the basis of successful innovation for the past two decades. He has been carefully building this theory based on collected data inductively.

The core premise of this theory is that customers are “hiring” a product / service to make a progress in their life situation and that they are not buying a product or service.  If they don’t like it, they “fire” the product. If an organization understands this, then the entire culture can be built towards this and there is less and less friction and things get done. The author points to numerous examples, but the two that standout are GM’s OnStar and Intuit’s TurboTax. The story of TurboTax is something we all (folks in Information Technology) can easily appreciate. In case of TurboTax, historically the software used to ask a whole bunch of questions in a wizard approach so it can prepare the tax form. The folks kept asking for what other questions can we ask to make your (customer’s) life easier and that they were getting so much feedback. The team was happy and set out to implement all these new questions in the wizard. However, when they started thinking what is that the user of the TurboTax want? He/She hates the tax preparation process (like everyone) and wants to get it done quick and correctly. They would be happy if they were not asked any questions! Thus they started working towards minimizing the number of questions, starting with automatic pulling of W-2 from payroll processors. Thus one should focus on “why the customers want to use your product?”. He quotes Ted Levitt “they want a quarter inch hole and not quarter inch drill”. If you understand that then you can build a product / service that results in a quarter inch hole.

According to the author, majority of the start-ups begin with the laser sharp focus on “the job to be done”, but they lose focus as they start growing. They lose sight of why the customer wanted them in the first place and starts focusing on the customer (demographics etc), the sales (geography, kind of stores, seasonal) and many more metrics that are getting collected. One very good perspective he reminded in this book on data analytics is that you (the management) decides on which data to collect and thus your results are skewed by analyzing the collected data as you don’t know anything about stuff on which data is not collected.

The book goes on to state how to identify the jobs to be done. Here are the broad five categories

  1. Finding a job close to home – Look at yourself (eg. Reed Hastings of Netflix)
  2. Competing with Nothing – Look at “non consumption”- people choose to continue the statusquo in the absence of a product / solution. – Airbnb – people would chose not to go when hotel space is not available.
  3. Workarounds and compensating behavior – Look out how people are accomplishing a task using different products. – Kimberly Clark created “Silhouettes” based on this approach.
  4. Look for what people don’t want to do – CVS created Minute-Clinics based on the observation that people don’t want to wait to see a doctor.
  5. Unusual Uses – Look out how people are using products that are not meant for that specific job. Arm & Hammer created so many products based on the observation how customers were using their “Baking Soda”.

Once you identify the “job to be done”, the book also explains how to convert that into a product that people want. Once you created the product, the book talks about how you can stay focused on it by discussing the “Fallacies of Innovation Data”.

  1. The fallacy of active vs. passive data
  2. The fallacy of surface growth
  3. The fallacy of conforming data

I want to end this entry with a couple of thoughts.  I always thought about the impulse purchase with a suspect. I’m not denying that someone buys a product on impulse, but most of the purchases are not impulse. The seed for that is sown a while back. This is explained in a very live fashion in this book as well on an interview documentary on a person’s mattress purchase in Costco. Those who frequent to Costco can truly appreciate this section (page 107 – 115). These pages has brought Costco live in my mind, written up so wonderful. This shows how you should analyze  why people buy your products, need to get to the root of it.

Having written on “Disruptive Innovation” and “Jobs to be done”, I would love to read or be involved in a research work on what is the optimal point to introduce new products without killing an existing product prematurely. In other words, what is the optimal way to cannibalize a product.

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Significance of SSL Certificates

January 19, 2017

This is not a big write up exploring why you need SSL certificates, their need etc. You need to see this as a continuity to my previous post on browser push notifications.

This is the beginning of the year and is a good excuse to review all your websites and their SSL (HTTPS) certificates and make sure they are valid. It is one of the best practice for your websites to support https if it allows login. Your webapp will look so sorry and in some cases, outright rejected and you end up losing your ground. The current browsers do a validation themselves as well as the myriad security products from Norton to free Avast may block, suggest that your website is not secure.

In the last post, we noticed the beauty and significance of browser push notifications. Here, in the current one, I’m talking about servers that host & send these messages. The floating pop-ups or suggestive windows such as the Chat app, that show up to assist the customers may be a totally different app. Gone are the days were the app and all its components lived in one server. now every one of them may live on their own and not even in the same data center or country! This is the day and age of Micro services architecture (better than SOA), each app is a service plugged in to make a complete offering. The web solutions these days are like a giant 1000 piece puzzle and you should orchestrate better.

ssl

Here is an example where even a company such as Bank of America has an SSL certificate that is not valid. You could spend all your money in developing nice features but at the end something as simple (wild card certificates are not cheap) an invalid SSL, will block and the messages / features / notifications would not see the light!

 

Browser Push Notifications

January 6, 2017

You might have heard about push notifications for apps (Android, Apple, Windows – for completeness sake :-)), but to bridge the gap, browsers are coming up with support for push notifications. Currently Firefox and Google Chrome support push notifications. You might have seen something like this recently when you visited a certain website. for eg: one from economictimes.com

notify

It is a pretty cool feature. With email becoming ubiquitous and gmail tagging emails under “promotion”, you need a way to reach out to your customers on significant events.  I can state a laundry list of scenario where this will be useful.

Let us say,

  • You booked a flight and checked-in, the gate changed
  • You booked a ticket for an event, you want to show parking tips or parking coupon
  • You have a business website, wherein a crucial information is made available and the client need to be notified.
  • customer left items in the shopping cart, show promotional or price change alert

and more. Here is an introductory video on this

https://developers.google.com/web/fundamentals/engage-and-retain/push-notifications/video

Yes, you can email, SMS  your clientele but in the world of diminishing attention, you need to grab as much an attention you can get.

Please drop me a line if you are interested to discuss or interested to implement this for your business.

To Upgrade (or not?)

August 16, 2016

We see all these attractive things in life. we want this, we want that, do we really need? we don’t ask that question. That is the ONE question and the OTHER question is what would it be if we don’t get that? The answers to these two questions pretty much sums up your next course of action.

However, often times it is not as simple as that. If you have a 10 year old Toyota Camry and you want a Mercedes 300, it’s one thing but what if you have a Windows XP PC (yeah!, you read it right) and it works just fine @ work or @ home and you need to upgrade to Windows 7 or 10 (Please don’t think of 8).  If it is @ home, at least you are the only one that is exposed but if it is your work, your exposure is whole lot and not just financially but also the number of people it will impact.  I’m going to focus on running unsupported software here.

I come across this scenario a lot and especially recently. The world has come across the fact that the 800 pound gorilla that has woken up (yes, I’m talking about Microsoft). They have started churning up software that is inline with current global market and to address the current global risks. In thinking through the process, there is no golden rule or a magic wand to figure out, is it time to bite the bullet and upgrade. However, we can come up some guiding principles or set of questions to help us in the decision making process. Based on the experience, interactions with our clients, feedback, industry pundits, I came up with a set of guiding principles. (Again this is just a sample.)

  • Are you in a regulated industry? Is your systems conforms to the govt. regulations
  • Do you have a corporate governance committee? Is your systems conforms to the governance rules laid out?
  • Is there and industry standards body that you are part of? Is your systems conform that (basically you are not just preaching but walking the talk)
  • When did you last perform an upgrade? How many versions are you behind?
  • Any (how many) of your systems use software that are not supported by respective vendors?
  • Are all customer facing systems are running supported software?
  • What is the cost of not performing an upgrade? What is your plan when Sh*** hits the fan or things stop working?

If you are in a regulated industry, you don’t have an wiggle room, you need to follow the govt. regulations. You need to be honest with yourself, thus you should be conforming to your own standards. These are rules that you laid for yourself that you should follow (remember those new year resolutions of going to the gym? – well this doesn’t belong in that category). You are part of a world / industry standards body and you need to stick up. if you are not then who will? Then comes when did you last perform an upgrade. I get it is a chore and too much impact etc. But if your answer is half a decade or more, you have reached a point where the cost of inaction is more than your action. If or how many are using unsupported – if the answer is more than ZERO and they are being used in a customer facing environment, you probably don’t have “a plan” for the last question. If it is the internal systems, you will be able to setup more security rules, un-maintained servers a.k.a – you got a parachute. However the last question is the most critical of the lot for your business. When you do this, you are not just jumping of the plane, but you are jumping off the plane with no parachutes (for anyone in your organization). Depending on how critical, you can make the jobs obsolete, in turn the employees and in result you own organization. Remember we read about stuff on the newspaper and other media about such incidents? Do you want to be one such example?

IMHO, the ideal upgrade is Three years and not more than FIVE. Beyond which, you will get into the problems of unsupported software, security, obsolete technology, rusted workforce and more.

What are your guiding principles? Drop me a line.

Microsoft Open Source

August 8, 2016

Yes, You read it correct, I hear you, saying, isn’t it an oxymoron? Well, it is not.The world is abuzz that ever since Satya took over Microsoft, things started changing. It is more developer friendly, it is more open to new ideas, it is collaborating with various vendors, partners yada yada yada…

This new era started with Microsoft embracing Linux, letting you create Linux instances in Azure. You all know that Visual Studio is free to the entire world. I have been associated with technologies in the past couple of decades, one of the best tool for developers is Visual Studio, hands down (No offense to Eclipse, Sublime and the like). They used to do this before calling it developer edition, then called community edition, trial edition. These various editions are either teasers i.e the features you want to use are not available and that you need to buy the paid version or it will be available only for 90 days or some limited period. They have gone out of that mindset and said, well there is going to be one edition an is free.

The best development tool in the world, the one that is very well integrated with the Azure cloud that lets you manage, create, deploy the assets is free now. If you thought that is not enough, recently, Microsoft announced that they are giving the SQL Server Developer edition Free. This is huge! I remember struggling with the so called SQL Server Developer edition couple of years back that it doesn’t have analysis services, integration services, SSRS, the SQL Agent. Now all that is available. So what is the catch? Nothing. This edition is exactly same as the SQL Server Enterprise Edition. The download link is here. You just need to signup / create an account with VS essentials. The only limitation is that Microsoft says, you cannot use Developer edition in any production environment. At least, you don’t have to worry about purchasing when you are developing your product. You focus on developing the product and when it comes to deploying or taking it live, you can worry about it. Even then, both Microsoft and Amazon offers you to participate in various “Start up” initiatives that you an benefit from.

I hear you asking, so what brought about this change? IMHO, this is how Microsoft was operating from inception. They probably forgot for a while when Steve was at the helm. It was Novell Netware (you guys remember?) that pioneered Local networks in the corporate world, then came Windows NT. You all remember what happened to Netscape? Well, Microsoft offered Internet Explorer free. We didn’t get anything free for a while and now it started again. You get Visual Studio, SQL Server Developer, Xamarin for mobile apps, the start-up initiative, Linux.

Don’t over analyze. Start working on your next idea and the ecosystem is available for you to use the best tools out there. What are you waiting for? Microsoft is Open to sourcing it from / to you. Happy developing.

PS: The complete licensing guide for SQL Server 2014. if you are in doubt, don’t hesitate to drop me a line.

What could Walmart do? (2003)

June 4, 2011

Came across the following news on walmart.

http://finance.yahoo.com/news/WalMart-unveils-ministores-apf-3717387681.html?x=0&sec=topStories&pos=7&asset=&ccode

Its an irony that  in Year 2003 while doing my MBA I wrote this up on what should Walmart do next on Strategy? Here it is.

Wal*Mart could achieve growth in the seemingly saturated discount retailing by expanding the cost advantage to new sectors, new urban and international markets and continuing to invest in new technologies.

Expansion to New Sectors

WalMart has the cost advantage in all cost centers compared to its competitors except technology[1]. With super centers, it took discount retailing to the next level by creating a combo offering of supermarket and general merchandise. The retailer should expand the notion of supercenters to include various basic routine services such as Laundromats, automobile service stations, hair salon etc.  Since the food and groceries market had a very small margin of 1-2%, supercenters use that to attract customers and make profits by selling the general merchandise[2]; these additional specialty services could be offered under one roof. The automobile service stations should do routine services such as tire change, oil change etc rather than getting into offering full-fledged mechanical servicing. Drop-off and Pick-up facilities should be offered in select departments such as Laundromats, pharmacy etc. Thus by reducing the contribution of food sales to the overall store sales and increasing contribution of services and general merchandise, the profit margin of these stores could be improved further. The concept of super markets, super centers and discount retailers is that to take advantage of the economies of scale. By expanding into basic routine services, WalMart could leverage the fixed investment, drive down costs further and become a one-stop shop.

Expansion to Urban markets

The retailer should plan for more store openings in the urban markets in the future as it has almost saturated the less competitive rural markets. The rural segment is ideal for the company to grow in the initial phase, with less competition it was able to concentrate on improvising its processes. Now it should enter the urban market to take advantage of its efficient distribution network and the cost advantage. The main obstacle for urban expansion is the non-availability of the real estate on the scale required for supercenters and its huge stores. Not all urban stores need to provide all the services and all the products. WalMart with the help of its sophisticated information systems should trim its products & services offering and redesign its stores to fit the urban needs. For example, to solve the real estate problem, the stores could be redesigned to fit multi-storied structure in some urban areas and a scaled down version in some other areas. Combined with its slogan of “Always Low Prices Always” and the concept of one stop shop is ideally suited for the fast paced urban life and could save a large amount of time for the customers. These redefined stores should be backed-up by establishing Sam’s Clubs on the outskirts of the cities.

Expansion to International markets

Human needs are the same across nations with slight preferences towards certain things depending on the culture. WalMart could copy its cost efficiency to new markets to repeat its growth in next phase. The safest route to expand into international markets is by acquiring the existing retail chains. Once the company familiarizes itself to the culture then it could expand to neighboring countries. In the first phase, WalMart should expand intoCanada, all Latin American countries, start withUKin Europe and then inAustraliabefore entering Asian and African markets. Being the leading retailer in US, it understands the western and Latin American culture. Hence it would be easy to expand into these markets in the second phase and sustain the current growth.

Investment in New technologies

One of the main reasons for its success is the continuous improvement of its processes (distribution, logistics, customer service, inventory control, central purchasing etc) by investing in technology[3]. It this urge to innovate that helps it maintain the leadership position and is required to sustain growth in this mature market. The company should forge partnership with universities and other manufacturers on technologies that aid improving inventory control, distribution and supply chain. It should lead the retailers by adopting new technologies to improve its processes further. This will lay foundation for its next phase of growth and help sustain its growth in two digits; otherwise the retailer would not be able to maintain its lead position.

Thus WalMart could continue on its growth path by expanding into basic routine services in its stores; enter urban markets by redefining and restructuring stores; International expansion into all of Americas, start with UK in Europe and Australia before venturing into Asian and African markets; and set the platform for next growth phase by continuing to adopt new technologies to improve its processes.


[1] IS expense is 1.5% of store sales compared to 1.3% for direct competitors

[2] 40% of super center sales is from food.

[3] Established satellite communication facility and linked up all the stores.