Raj Shankar's Blog, page 31

The Joy of Giving

As I was driving down for a meeting today, I saw festive lights and christmas decorations adorn many shops on the road side. This got me thinking around christmas, the spirit around the season and so many heart warming anecdotes that one gets to hear. It then stuck me that there was this one incident that I had the good fortune to witness first hand.  I had written about it in my forum during this very month couple of years ago. A story that touched many reader’s heart and spirit. So I thought it is a good time to share and spread some cheer! So I did some work… dug up the story from my archives and here it is for you….

I stay in a fairly large residential colony. Some houses witness Christmas decorations and red stars can be seen hanging outside a window. Apart from that and the plum cake that makes its way into my house, I have been isolated from Christmas celebration. But what I was fortunate to witness yesterday not only gave me the inspiration for the blog, but a new perspective of how we can view the Joy of Giving. I was walking back to an empty home for the night, so was not hence in much of a hurry!

As I entered my colony, I saw a rather thin Santa Claus walking into the first floor house of the opposite building into a house which I knew belonged to a old Hindu lady living alone. Her Children are NRI who visit her once in two years. Normally a cheerful lady, she was getting older by the day and quieter. So I was intrigued by this Santa who stood outside her door, shaking a bell in one hand while knocking with the other. Some others who were also drawn by this unusual scene gathered along. Out of our deference for Santa did not brow beat him into asking his identity but joined him outside the lady’s door. Reassured on seeing us along with this stranger Santa, the lady opened the door and the lone Santa burst into a merry song..IN TAMIL!!

When Santa opened his mouth to sing it was hard to conceal the identity. It was our iron man (istri wala)..who had borrowed a Santa Costume from his customer. He had heard the lady tell him casually how much she misses her children and how every function is an ordeal reminding her of her loneliness. And this reminded him of his parents back in village all alone by themselves. He wanted to do something to make her feel better. And hence the disguise.

 The lady was swept with emotions and gave a bear hug not only to Santa but almost to all of us who had assembled. We were all pulled instantly into the mood of wishing good luck to each other. The whole celebration lasted all but 10 mins but left a night long warmth from having been a part of something good from the bottom of the heart! Going by my emotions, everyone who was a part of the spectator crowd felt as much happy as the lady for whom the visit was staged!

Today the spirit of Christmas often conjures up in one’s mind decorated Christmas tree and presents. Underneath the presents, we seem to have buried the true spirit of “Giving”. If only we can extend the true Christmas spirit to our every day life – it would be so enriching every time we give; not presents – but our time and our attention. A selfless gesture motivates many more in the person who performs it and inspires the receiver to do it unto someone else. It is like a flywheel that picks momentum with every turn.

While we set ourselves ambitious targets in personal and professional life, can we set a simple target for acts of selflessness to be done if not daily – at least weekly? If you have a ward in scouts you can see them going around with good-deed book where they have to authenticate from the receiver an act of good will they have performed. As adults – where is our good deed book?

As we all cross another Christmas season – maybe it will be of value if we can put ourselves to believe:  “Christmas is a state of mind – not a date. Christmas is in the heart – and not under an Xmas Tree!!”

Interesting Links This Week: 08-December-2013

‘Team work, brainstorming, tinkering and patience’ seems to be the way Jeff Bezos of Amazon and Washington Post makes innovation work. There must be something important to why this man says innovation takes time and requires there. Think about them and how you may find these helpful as your grow your business as well.

Read more here – Link: http://www.inc.com/samuel-bacharach/jeff-bezos-innovation-formula.html

 

Mark Frissora is the CEO of Hertz, one of the leading car rental companies in the world. How much time should a CEO spend in operations? Is it important? How does that impact decision making? These are some of the questions answered in this interview. I also found their TOM Model interesting to keep entrepreneurial and innovation orientation in the company alive. An interesting list of answers filled with insights of how to re-vitalize business when advantages seem transient. Read more here – Link: http://www.mckinsey.com/Insights/Strategy/Leading_in_the_21st_century_An_interview_with_Hertz_CEO_Mark_Frissora

 

David Teece is the famed professor behind the Dynamic Capabilities concept in strategy. He had Nobel Laureate Oliver Williamson as a mentor. His students include Gary Pisano and Henry Chesbrough. His theories are becoming even more critical in today’s hyper competitive world. Every system gets duplicated or imitated in some form as soon as it is implemented. There seems to be no cover to best practices. It then becomes important to develop capabilities that not only are unique but which also remain agile and adapt to changes. An interesting interview with an interesting strategic thinker!

Read more here – Link:  http://www.strategy-business.com/article/00225?gko=d24f3

Books and Me: BRAG – The art of tooting your own horn without blowing it

Book Title: BRAG – The art of tooting your own horn without blowing it!

Author: Peggy Klaus

When you give a man a horn, he will blow it or toot it! Whether it sounds like cacophony or music will depend on how he does it? If the “horn” meant talking about yourself, then you must ensure the resultant sound is like music to listeners.

Peggy Klaus is a definitive communicator. She gives her message to the reader loud and clear. Her book “BRAG” is a recommended read in today’s hyper competitive world and attention deficit community. She clearly elucidates the need for self promotion and also the negative meaning attached to the phrase. At times to someone who realizes the need for the skill at self-promotion, the repetition of reasons against or obstacles may seem redundant.

The book details a lot on the excuses people give themselves for not tooting their own horn and why one needs to convince themselves about the need for doing it. Another thing is also to ensure that doing it anyhow is dangerous and can seriously backfire. If not done correctly it can also assume wrong connotations.

Preparation as the key (using the take-12 questionnaire) has been rightly given its due place. Especially in the case of such a sensitive skill, preparation and practice can help avoid embarrassing moments and failure in self-promotion.

The book elucidates numerous instances where self-promotion is much needed. The detailing using examples makes it amply clear “how-to” and “how-not-to” –toot your own horn in all of these situations.

Amongst the many situations where the bragging skills can be applied, I found “When you’re out on your own” chapter to be the most relevant for an entrepreneur. In my role as a researcher, teacher, author, writer and entrepreneur I think this skill is much needed. All entrepreneurs will need to perfect the art. The book’s inherent message that self-promotion is not bad when done right is a basic input to all entrepreneurs. Selling is an inherent part of entrepreneurship and the salesman / saleswoman (entrepreneur in this case) is the most important in the sales process. But most entrepreneurs never learn this skill – they try to hard sell their way or don’t sell at all. While it may come as a surprise to many, it remains the reality. One of the reasons why entrepreneurs (especially in India) don’t naturally tend towards selling is their cultural upbringing of being advised not to ‘brag’ about oneself. While the intent of the advice is noble, its practice requires skill. If one learns the art of ‘tooting’ one’s own horn without sounding like ‘bragging’ – it could bring attention and eventually open the potential for future sales.

The best parts of the book include take-12, brag-nags and the chapter on bragging for the self-employed or entrepreneurial variety. This topic was / is and will be very important. In today’s attention deficit world, the art of subtly promoting oneself is very important and is slowly becoming a necessity. This book is important for entrepreneurs and anyone who wants to establish oneself in a group. The book is an easy read, easy to carry around, has excellent binding, printing and is almost devoid of any English error. It does not have distractions except for the often-repeated reason of why one should not detest tooting. For more information on the book you can look up at www.bragbetter.com

Happy Reading!

Finance for Entrepreneurs: Understanding Revenue

Revenue is a very funny line in the profit and loss statement. If you remember from our earlier lesson, the profit and loss statement is also known as the income statement. In the income statement, right at the top one will find the revenue mentioned. What comprises revenue? How is it measured? These will be discussed in this lesson.

Revenue is measurement of the sales that the business has achieved. It is fairly clear metric to measure and compare since there is very little difference on the understanding between enterprises. While some entrepreneurs call something revenue only when they collect cash or receive cash from the client, for accounting purposes it is considered otherwise. Every time a business raises an invoice the value of the invoice gets added to the top line. Revenue is also popularly called Top Line.

Since there is common understanding (thanks for Generally Accepted Accounting Practices or GAAP) regarding how revenue should be captured it is easy to use it for comparison and benchmarking. While profits can be easily modified and played around with, revenue in general is not. I agree that there are exceptions and in this case probably exceptions are not really the examples to follow! Fabricating financial statements is something that makes reading and evaluating them a difficulty. But since we are learning finance more for internal analysis, we will ignore decorating financial statements for a while. In later lessons we will discuss how to find these smart modifications and how they lead to ethical dilemmas.

Revenue also is a way to capture revenue streams of a business. Segregating the revenue line into sub heads will tell us where the money is actually coming from. If the start-up has revenue from multiple products or services, they should be individually captured so as to understand the revenue mix. It will also tell us which products are really taking off and which are pulling the start-up down? It is important to split the non business operations revenue from the primary business operations revenue. This is important because as an emerging business the source of your inflow is more important than the inflow itself. If your business operation is showing promise, then investors and other stakeholders will show more interest on your enterprise. On the other hand, if revenue quality from primary business operations is not showing great improvements then it may indicate lack of growth potential in the enterprise.

What could be revenue from non primary business operations? I am sure as an entrepreneur you are surprised about this. I am struggling to make money from selling my products and services, and where is the time to make money from other sources? But you will be surprised that after a few months / years into enterprise creation, the pressure to show revenues makes entrepreneurs do some standard mistakes. Here are two such situations:

a)      Doing adjacent or non primary business sales: If you are a product company, invariably one ends up making money out of services at the start. Slowly and steadily the services income becomes stable and the enticement of revenue and profits delays product creation. This also reduces focus of the entrepreneurial journey. Example: Electronics based product start-up ended up building circuit boards and custom requirements to make money in the interim period, but since their core engineering team ended up splitting the time between products and services, the product development suffered. This led to poor marketing efforts as well for products. But during the entire period the sales and thereby the revenue kept increasing. Any evaluation on a broad basis showed the start-up improving top line every quarter, but one realizes that they are no more a product start-up that they intended to be. When they visit investors and showcase their enterprise for large equity investments, they don’t get interest and they continue to wonder why?

b)      Parking extra money in interest generating financial instruments: If a start-up makes money from interest, it is a smart thing. It is smart thinking from the entrepreneur. She/he quickly realizes the importance of not keeping money idle in the current accounts (which don’t give interest as against savings accounts which give a nominal interest). Hence they act like money managers constantly moving money in and out of the current account. This takes time and effort. At times this interest income can be as large as 10% – 15% of a start-up’s profit. This makes the activity more interesting. But percentage based calculations also makes one forget two things: one, the business of the entrepreneur is making the product/service and not money management; and two, if you don’t find investing the money into your own business more exciting than putting it in revenue generating financial instruments, it speaks a lot to future investors. I am not saying utilizing money to make money through short term financial investments is bad, but it distracts.

Hence breaking up the revenue line in the business is a clear indicator to the entrepreneur of how the enterprise is performing. Capturing the revenue as soon as invoice is generated also keeps the enterprise on their toes to make collections. Entrepreneurs must learn to split revenues into those from primary operations (reason why you started the firm) and from all others. Every time the non operations revenue is going higher than the primary intended revenue from operations, one needs to check why? It could also mean that it is time to change focus and trigger plan B – who knows?

The objective of the lesson was to expose to entrepreneurs to what revenue means on an income statement and what comprises it. The lesson also highlighted the importance of maintaining a detailed revenue block, review the revenue based on operations and others, and constantly ask oneself if this is how you want to enterprise to be and where this would lead a year from now. Two common smart but erring (may be) actions of entrepreneurs have also been highlighted as well. While no action is outright wrong, it is important to know why we engage in them!

Think!

Knowledge Worker Community: Is it Over Managed & Under Led?

Thanks to management thinkers such as Peter Drucker, Thomas Davenport amongst others, the concept of Knowledge Worker has definitely become clear. This understanding has led to number of studies showing increased interest in understanding the nuances of managing knowledge workers, the change from blue-collar worker management to while-collar worker management to knowledge worker management! But what we have lost rather may have lost is that – it is only resources which can be managed, not people! The whole idea of human being as a resource needs thinking – because then we may actually start trying to lead rather than to manage.

Managing and Leading are two activities with different objectives requiring their individual practitioners almost conflicting characteristics. Just think! Hence if we subscribe to the view that human beings especially knowledge workers are not plain resources available to institutions and society at large then we need more thinking – Should they be managed or led? Can they be shown the way and let to manage themselves? Should they then be trained / tutored / mentored on understanding contribution over commitment?

The very idea of knowledge workers indicates people who are willing to do the thinking and identify what is best for the accomplishment of an activity. This being the case will it make sense to tell them this is the way ahead or will it make better sense to let them know where we want to go and allow them to contribute in reaching there. There is also a very important second thought to this – the idea of contributing. When a person believes in a cause and contributes to it – he / she gives more into the goal at hand than treating that as an activity imposed by a superior. Since many organizational practices still are incremental improvements over the industrial age habits – and the workers have shifted from blue-collar thinking to knowledge-worker mindset, it is resulting in a friction. Many of us also experience this while leading or being led!

Every leader of repute wants to have more passionate people walk-in to work everyday. If we need to really start seeing passion-filled people walking into glass building everyday it is important to understand the nature of this change. We need to accept, acknowledge and incorporate new techniques, processes to enable knowledge workers to identify and align themselves to what they like to do. Since this requires a certain level of convincing the heart more than the mind, this may not be possible too easily for managers – it may be in the realm of true leaders to make this transition!

Vedantic Wednesday: Teaching under a Tree

Yesterday I had the pleasure of conducting classes in a remote location of Tamil Nadu. This was part of a faculty development program on entrepreneurship and the only thing different this time around was the experiment of trying to conduct class at a location close to nature. We went there in the morning by bus and were soon in the midst of hills and thick vegetation. There was only brown and green all around. The air was filled with oxygen and silence. We had hens and goats roaming around, a little brook flowing behind and thatched classrooms. Our first session happened in the classroom. At tea break we sat on the benches under a tree and chatted. I proposed to the group if we could continue our session right there under the tree – the excited group (about 20 of them) agreed instantaneously. We moved a little white board and started.

That was my first ever class facilitated under a tree right in the open. No walls enclosing us, no technology like projectors, computers or speakers – just the 20 of us, a whiteboard, goats and hens.

We went on with our class till end of day. Since it started drizzling we moved back into the class for the closing session of about 30 minutes at end of day. Here are some interesting observations about the session and the experience:

Not even once did anyone feel sleepy or drowsy even for a moment
The whole class was discussion oriented without any technology distractions
There were no inhibitions and no limitations via walls – made us feel open both physically and mentally
Though the interactions were intense, they happened in a very light and informal setting

The validation that most of these were heavily influenced by the setting became clear when we found people becoming drowsy during the last 30 minutes when people went back into the classroom. No wonder then that our ancient Gurukula system happened in open spaces! Education needs to be as open as possible for it to deliver greatest value, and there seems to be no better setting to make learning happen than under a tree. Our ancestors (seers with great wisdom) had experimented and evolved these education methods. Hope we don’t lose out on our ancient wisdom.

Look forward to learning and teaching more in such natural settings. Think about it!

Commoditized Knowledge Companies – Future?

If you are an entrepreneur interested in entering the knowledge business or a leader of a small business in the IT / ITES space, take the quick check test below:

Can you spell out your Unique Selling Proposition?
Is it necessary to be differentiated?
Have you spent time identifying your differentiators?
What are you doing to create a brand around your organization?
In the coming year what is your plan for increasing brand value?

How many of you felt this set simply does not apply to you as you do not require branding? We specially request all of you who feel this way to read on…

The IT and IT enabled sector has been getting a lot of attention in India over the last decade. We have seen number of companies mushroom, some have grown into billion dollar businesses and others have nearly disappeared from the scene. All in some form have taken a pie from the opportunity. While the initial players raked fortunes because of the first mover advantage and strong leadership, many of today’s small and medium enterprises have got stuck in what is typically called “No man’s land” or “Stuck in the middle” syndrome. They struck an opportunity, but did not do anything more than that. They did not spend time looking for the next game – they focused on improving productivity over identifying opportunity.

IT and ITES should have been a knowledge based industry where in expertise and value-add should have emerged as key distinguisher’s. But today the playground resembles more of commoditized market, where it is predominantly price and throughput that are determinants. This is something that is coming out strongly in our interaction with the industry. Most of the leaders pride in service quality which is associated with “giving more at less cost” or “ability to engage with customers in a more intense manner” (which actually translates to saying “YES” to everything that is being asked by the customer).

If these are the two aspects that 90% of the industry is quoting albeit in different lingo as their differentiator – then can they truly be differentiators? In our attempt to blindly race on price and time we have created today an undifferentiated market. If the choice of an organization is to be more inclined towards the commodity market – there is no need for seeking differentiators. But growing is always difficult in an undifferentiated market.

While the industry was working on providing the customer the price advantage, “low-cost service” has become a standard expectation. The customer today wants to see something more from their IT partners. There has always been an inclination for human beings to seek/reach as far up the value chain as possible and the knowledge economy is really testing the height of this value chain. Customers today are expecting “Solution specialists”, “Expert Business Understanding” and “Business Enablers” from their partners. The customers are also willing today to pay a premium if they see “Value”. The customer today is redefining the parameters of the game.

If you agree with the above, can you afford to be operating in the dynamics of an “undifferentiated market”? Do we really have a choice today? We strongly feel only those organization that buck up on creating meaningful differentiators – that are seen as “value add” by customers, will grow in the coming years. Organizations which take a call to move on “increasing internal efficiency” and “cost advantage” would soon find themselves more and more stuck

The low entry barrier for IT and ITES is making the market increasingly crowded. Coupled to this is the “buzz” of the giants in the industry seeking methods now to move up the value chain. Both these factors are also influencing the rules of the game. And if you are not familiar with the new rules – you may soon find it difficult to be in the game.

How much talk is being done around value chain –  lots and More! But are we doing something about it – very LESS! During our recent meetings with leaders of small and medium organizations in the knowledge space, it is becoming apparent that they are in no urgency to seek differentiation or build brands. Every one seemingly stumbles when it comes to defining high-end, value added services.

The most often quoted reason for not seeking to build differentiation or brand is the associated price. However one cannot help wondering, could the actual reason be the dreaded “comfort zone syndrome”? The feeling of one doing “reasonably well” today without indulging in differentiated services – is this stopping us from being prepared when the tide turns?

Energizing the Entrepreneur

It is overstated that entrepreneurs live, breath, dream, speak, etc only about their business! The subtler fact is that they are the ones who fill these enterprises with energy and enthusiasm. It is their vision, their thoughts, their plans and their actions that set it off the ground. It is also their motivation, message, persuasion and evangelizing that brings others into the enterprise – thereby leading to growth – through resonance of the thoughts of like-minded individuals. Everything seems great while the curve is going up – but the fact of life as we have seen number of times through business history, the economic cycles are never one way. They are mostly up and down – mostly within a band with sporadic spurts! When there are spikes – it hurts! Many businesses disappear; some reduce in size, impact or influence! The ideal entrepreneur must prepare himself / herself to withstand this turbulence and still do whatever they did earlier – that is breath life into their venture; provide the much needed oxygen when the turbulence reduces the pressure! For this, the entrepreneur needs to also do one thing – energize himself / herself, which includes both the mind and the body. The entrepreneur often neglects this.

To energize others we need to be energized. Just like how a well-maintained car is sent for preventive maintenance every 6 months (or as recommended), the entrepreneur must also accept that there is both physical and emotional wear and tear as one creates and grows the enterprise. Hence preventive maintenance is needed for the entrepreneur, which includes attention to both mind and body.

An entrepreneur needs to constantly work on his physical well-being. Most entrepreneurs work long hours, don’t take breaks, and have irregular eating habits. All of this has a definite bearing on their health. And most often when the opportunity comes after a real testing period for growth, the entrepreneur is very often tired and worn out. The physical self does not allow any more of those long nights. Hence a simple regular exercise routine, be it a jog in the morning, brisk walk or 3 – 4 weekly visits to a gym can not only keep the entrepreneur healthy, but also provide the much needed breaks during the day.

While some entrepreneurs do realize the need for physical exercise and make up – the mental wear and tear (emotional stretch) is often underestimated. While the enterprise is everything for the entrepreneur, should it not provide the much needed development of the mind? Fair question, but the truth is to ensure the successful and healthy creation of the enterprise, the entrepreneur needs to rejuvenate the mind through meditation, training, reading and thinking. Routine work on these like meditating for a few minutes a day, attending a workshop every year, reading good books and attending discourses can be life changing.

Yes! It might seem like some sermon, but as entrepreneurs popularly say – experience matters. May be there are times when entrepreneurs should not wait to experience! At this juncture, an important saying comes to mind: “A wise man learns from others mistakes, fools don’t from their own.” Let’s be wise!

Interesting Links This Week: 01-December-2013

Opening your books to your employees is what every entrepreneur wishes to speak about and dreams of doing one day – but rarely do you come across a person who practices this! Here is the story of one who not only practiced it but also achieved extraordinary success doing it. Entrepreneur Jack Stack shares his thoughts with Inc editor at large Bo Burlingham – they also have written a book on the same subject. Read more here – Link: http://www.inc.com/burt-helm/five-benefits-of-opening-your-books.html

So many people dream of becoming writers, painters, sculptors, dreamers, etc but rarely does one take the bold step to live the life they always want to! Here is author Susan Cain of the popular book on introverts “Quiet” sharing her journey to becoming one and tips on how anyone dreaming of becoming one can do too. Read more here – Link: http://www.linkedin.com/today/post/article/20131015200715-701389-how-to-quit-your-job-and-become-a-writer

As social animals we are always looking to connect with people all the time. We like or dislike people and constantly look to sharpen our skills to network with others. If you are in business or entrepreneurship you don’t have too much option to not indulge in networking; more so if you have a team to manage. How does on sharpen his / her social skills? Here is an interesting take on the subject. Did you know reading literature can make you socially sharp? Read more here – Link: http://www.fastcompany.com/3019369/leadership-now/why-reading-tolstoy-will-make-you-a-better-boss

Books and Me: Become a Key Person of Influence

Book Title: Become a Key Person of Influence

Author: Daniel Priestley

The book begins by stating that ‘Your best thinking from five years ago is your baggage today’! So true, isn’t it? Citing numerous examples the author provokes us to re-think and re-imagine our work today. How can we do what we are born to do? How can we engage in actions where we remain ‘in the zone’ most of the time? How can we fall into that small group who remain the greatest influencers of all time? How can we become a key person of influence in our trade or domain?

Any book that speaks about thought leadership is an immediate must read for me. I normally don’t miss a chance to see what I can learn from the author’s experience and research. This book shared a lot of tips and initiatives that I could take away and apply. As a thinker and writer myself in the area of entrepreneurship, I am always seeking fresh ways to experiment.

Two specific subjects that the author speaks about will make complete sense for every entrepreneur. The identification of micro-niches and approach one can take to reach these through thought leadership. This is a topic that has been on my research agenda for over two years now. I find this reference (though a small one) of immense support to my findings on the field.

The approaches to making pitches and what are the critical things needed to be a key person of influence, are solid and implementable takeaways from the book. Six P’s for pitching was interesting and practical. They are Position, Problem, Projection, Proposal, Proof, Project. The author clearly makes the case for everyone to become a small entrepreneur in today’s world. He also cites examples of how enterprises have built highly valuable and high growth enterprises by giving away their primary services free. They way the thoughts are shared get you thinking about your own ideas and dreams that everyone of us keep secretly within ourselves.

I am sure the world is ripe for big revolutions in entrepreneurship. Every emerging economy is striving hard to use entrepreneurship as the tool for socio-economic development. The author’s ideas and examples in the book make a clear case for people who are on the sidelines with an interest, but are still scared to jump into the game.

Read the book! Become an entrepreneur around an area that is close to your heart! Become a key person of influence in your domain! Change the World! Leave it a better place than what it was when you landed on it!

You may also want to read more from the author at: http://www.keypersonofinfluence.com