Indian Startups - When Business Ideas are imitable...

Hi Guys,

There was a nice little pamphlet in today’s newspaper that was an advertisement for a new intra-city logistics service started in Chennai. I was wondering how many similar services have been launched in the past one year. I can remember seeing advertisements of at least two similar players.

Almost all the new start-ups in India have been facing the same issue – Imitations. During my MBA, 0ne of my professors concluded his Strategy course saying,

‘Strategy is something that will differentiate your business from competitors providing superior Value Proposition to Customers over a sustainable period of time’

In short, if a Competitor can imitate your strategy, then it is not a strategy in itself.

For starting a business, Ideation is important. You have a good idea which can get customers and make money – Investors will pump in money. But today, I guess it is enough if you can take someone’s existing idea and pitch in quoting less competition in the field and enter into a direct cost war with your competitor.

Eternally, the companies says that acquiring a customer is important. It is all about deals, cashbacks, acquisitions and sales at any cost. But, I am not finding any of the companies providing superior service to the customer, creating relationship and making efforts to retain the customer.

If you look at any of the newer business areas that has emerged, you can find a minimum of at least two players or sometimes as big as ten players trying to catch the pie. You have Ola-Uber fiercely competing and providing deep discounts to customers and big incentives to drivers. If you consider any of the aggregator services – let it be Food Aggregators (FoodPanda, Zomato, Swiggy, etc), Grocery Aggregators (Big Basket, Grofers, PepperTap, etc), Hotel Aggregators (Oyo, Zo, GoIbibo, etc), the strategies have been more or less similar. One players enters the business. A few imitations are born. The discount war begins. Cash burns and you end up in a Catch-22 situation.

One of the key lessons taught in Strategy is that reducing your price is that last thing you need to do and that too when all other cards are exhausted. Most of these players seem to have only one card with them and that is the Pricing. Sometimes, I do wonder if these players are too myopic and are not thinking out of the box to attract and retain customers.

It remains pretty much the same with the big Daddys out there – Flipkart, Amazon and Snapdeal. But, one significant thing I find in ecommerce business is that these players are trying something to retain the customers. From my personal experience, Amazon has been trying to provide a great customer service and by treating customer as the king, they are making significant improvement in the market share.

Ultimately, I do wonder if many of the founders really have the passion to become the next big thing. Most of the Investor’s money goes into filling the pockets of founders (as remuneration) and to Customers as cashbacks and discounts (You know, it has been ages since I paid my Phone bill fully – Thanks to PayTm and Freecharge).

Happy Reading!

Jack: Straight from the Gut - Jack Welch - Book Review

Hi Guys,

I have always found it difficult to start an Autobiography and even more difficult to finish it. For the first time, I found an autobiography interesting and finished it very quickly. It all started with a case study for Strategic Management class. I was very impressed, borrowed the book from library and finished it in 3 days in my term break.

The book is more than a history of personal life. It provides a larger view on General Electric and how Jack Welch transformed GE with his leadership. He goes deep into many events and how he acted upon them and how he enabled people to perform better.

The book starts from his younger age and how his mother was his role model. He says his mother taught him an important lesson that if you can’t lose, you can’t win. Then he goes on into this education and how he joined GE in its Chemical Department in 1960s. The interesting fact is that Jack disliked GE and wanted to get out of it due to the bureaucracy. But, he stayed on selling himself to go into higher positions and went into the corporate office pretty soon.

He gives the full account of how the race to CEO was and how difficult it was for the candidates and how he made it. After becoming the CEO, he wants to move GE from the position of a ‘Giant Tank’ to ‘Agile Speed boat’. He describes about his Neutron Jack years, where he sacked many employees, sold many businesses and acquired many.

Then he moves on to how he improved the people side of the firm with Crotonville centre, stock options and so on. He moves on to describe how he continued to learn and introduced ‘Boundaryless’ term in the firm that enabled ideas to flow across. He continues to describe the main strategies that GE took in his years – Globalization, Services, Six Sigma and E-business. He says as a firm they have only 4 major transformation in the 20 years.

He says that it was people who did things, not strategy or machines. He writes, ‘In Manufacturing, we try to stamp out variance. With people, variance is everything’ He writes how he made good people stay back and poor people get out before worsening the system.

From the book, we know that Jack Welch is a guy who you won’t come across very often. He knew what he was doing. He didn’t wait, plan and do. He acted swiftly and he says that in the end he felt he waited a lot before getting into it. He understood business, he understood people and he enabled them. He is a great inspiration to all those people who want to run companies.

Many of the people focus on improving processes, reducing costs, building brands. But Jack says that it is people who matters most and it is an important lesson to all the young management grads. He writes in the end, ‘Great people, not great strategies, are what made it all work’

Happy Reading!

The Complexity of being Simple!

Hi Guys,

Many people say that ‘Being Simple is the most difficult thing in Life’. In the past few days, I have come across people saying that it is difficult for products too.

We are living in an era where Technology advances each day and at the end of the day, it is difficult for the user to assimilate all the advancements in his mind.

Last week, I had the privilege of listening to Mr. Alok Goel, who is currently the Chief Product Officer of Redbus. He was giving a speech on Disruptive Innovation. He was saying that in a world filled with complexities, being simple is a disruptive innovation. He was saying about Google Docs. In 2005, when Google Docs was introduced, Microsoft never considered it as a Competitor. Microsoft continued to upgrade its Office Software. It added more and more features and made it difficult for people to understand the features. An average user uses only 5-10% of the features. In the same phase, Google continued to improve its Docs and the main advantage of Docs is that it is simple and easy to use. It has the necessary features alone. So more and more people have started using Docs.

Today, I was reading the book ‘Five Future Strategies you need right now’ written by George Stalk of BCG. One of the five strategies was dealing with Complexities. The author says that though being simple is said to be the best thing, people love Complexities. Whenever we buy things, particularly electronic goods we make sure that the products have all the features. The author goes on to say that companies that provide Complex stuffs in a simple manner go on to win. The best example is Dell Online Store, where each and every step is explained and you are fully aware of what you are doing.

A few days before I came across a phrase in Facebook which said ‘Today we have Smart Phones and Stupid People’. I feel that the Complexity is the main reason behind this. Thought there are lot of features in Smart Phone, not all people want all features. But when they are buying the phone, they would ensure that the phone has all the features.

I feel that today people are psychologically compelled to buy Complex Products, though they are more comfortable using simple products. They just do not want to admit to the world that they can’t use Complex Products. Being simple is too Complex, isn’t it?

Happy Reading!!!

Strategies in IPL Auctions!

Hi Guys,

It has been a long time since I started writing. The fact that this is my 200^th post is quite amazing. As the days have went by, the number of posts has decreased proportionately. There are two reasons behind this. One is that I have got busy in life and second one is I think quite seriously before writing each post. For the past few days I have been of the idea of writing an E-book. I have been doing some research on publishing e-book. Anyway, I am not a person who can write long. So, I am still in confused thoughts. Let’s see, how things go.

In this post, I’m going to write about the IPL auction that took place yesterday. Like the previous versions of IPL auctions, this edition too had many surprises. Each team followed a different strategy. Some players who are very young and unknown became very rich by the end of the day.

Thinking a little on why some teams just keep rising the bids, two things come into my mind. One maybe the Ego factor, where two rival teams fight for a single player. In that case, the past performance or talent of a player doesn’t come into play and the teams enter into Irrational Bidding. The other factor might be a trap. If one team is so desperate on getting a player and other teams come to know of it, they might keep increasing the stakes of the player and make the other team pay high for him. This way the spending capacity of the team goes down and the other teams can concentrate on their wish list.

Some teams have got too many big names in their squad. From the past records, the teams that is strong on paper struggles at the end. The main reason is that at the end of the day, the teams (or Captains) don’t know who to pick and who to leave. The second is the team spirit gets decreased and individual talents come into play. Some teams like Rajasthan Royals have stuck to a 21 member squad instead of acquiring more players and creating problem.

The latest auctions were better compared to the previous versions where only the names of the players went into consideration. This time, the teams have considered the availability of the players, their recent performance and also their past performance in IPL.

Yet another strategy adapted by many teams is that of getting ‘Mystery Players’. A player who has played fewer matches is under exposed and the other teams find it difficult to handle the player. It has been the case in the past too. A new batsman or a bowler comes in and the opposition doesn’t know about the player’s particular style. Once the mystery players’ styles are exposed, their value goes down. The traditional proverb ‘Make hay while the sun shines’ goes well with these players.

A few well deserved players have missed out the chance. It is always a Zero Sum game with the franchises having a fixed wallet. At the end of the day, it boils down to the players’ form during the IPL, the team spirit and attitude and the Captain’s cleverness.

The players’ performances have never been proportional to the money they get. It has always been the case and I believe that it will be the case this season too. So the bottom line is that a better method has to be generated in which a player’s performance is linked with his performance.

Happy Reading!!!