I have been observing an interesting trend in customer requirements in recent times. While the requirements a few year back were restricted to managed services and people at the technical skill level, there are more and more openings for tactic and strategic roles and organizations are willing to staff aug such roles through Indian IT firms. However, startegically IT service providers in India has neither positioned itself nor strategised to reach this level. It is now a focus and trend that is catching up everyone's attention.
So, for many years we have been trying to crack the managed service model for support organizations through GDM and pyramid structure to reach scale and quality. The pyramid mandates that bulk of work gets done through flexible, core skills pool and risk and planning for this is done by relatively more expeirenced people. The leadership of these teams is defined by ability to manage and control teams and risks. Communication and hand on knowledge has been the key for the same.
However, now IT organizations have become comfortable in letting external vendors take on programmes end to end, aid in SME areas and seek inputs in planning and staregy for the IT. As this skill is short and expensive in local markets, there is more and more requirement for experience to travel and aid in such processes. These are not long term, annuity backed tail kind of business, nor is the skill easily an readily available. The service providers will need to identify these niche skills, build a relatively flat pyramid and grow the skills in SME and Programe Mangement sectors. There will be a learning curve and service providers will themselves haveto build the ecosystem and come to terms with the non volume, non crowd backed ratios of the work, but the ones who succeed will set themselves up for the next level in IT services and outsourcing.
Indian IT service providers will probably have to now think of a new service pyramid and build ecosystem and talent pool to cater to different segments:
Opearational Base: The operational model to support this should be pyramid driven, more and more youngsters, few stars to drive the work.Process and cost should be focus for support and BAU activities. Pricing should be based on quality of services requested. Uniform high pricing will not sustain, at the same time price paid should determine the service quality. Role ratios, freshers, processes are answers to the base of the servic pyramid.
Tactical Mid: Need to build work force for tactical roles like Application Development, Programme Management, Product Selection, Business Case creation for IT organization. This will not be essentially very broad based pyramid. This will require highly qualified, smart, team driven individuals. Interestingly, i think consulting firms have identified this gap and liked of deloitte, PWC and E&Y make a fair part of their margin by positioning themselves in these segments.
Staregic Cap: The real consulting organization for IT will sit here. This will require people from business background and broad technical know how. Such people should be able to think and plan on how can IT enable business. Decisions around cloud, security, outsourcing etc should fall under such role requirements.
Given the finesses with which we have made the operational model work, it is time to step up the pyramid and build a solution and eco system for the higher up skills and take on the market. The medium priced consulting firms have an edge over service providers, given the eco system of smarter people, ability to attract and retain such talent, but as long a suitable employee policies, packages and work opportunities are generated for such people, this should not be a tough one. We are definitely better positioned to move up AND deliver; given the operational strong base and network of relations in sales across myriad of IT organization. Branding differently for different segments will be key though.
Thursday, December 2, 2010
Sunday, October 17, 2010
IT Contracts - Where are they headed!
IT contracts with service providers have seen a changing phase in last few years. While the industry sought and leveraged various smaller and larger IT service providing firms for its generic and niche needs. It seems to be converging now. There is more and more push on Vendor Managers to deepen the relationship with larger service providers and procure mass of the required service mix through one window rather than negotiting with multiple firms.
If you have observed, most large IT procurement organizations have consolidated their requirements to negotiate through one window and usually sign one large master service agreements with chosen few vendors who they trust with provisioning 60-70% of their BAU services. The consolidation helps them create volume and get better prices, it also in a way leaves the smaller contracts' resposibility on service providers by pushing them to provide end to end services. Many IT service firms are moving to liasion with Data Centers, product vendors, to create services that they can provide under the MSA rates and that can help them gain larger share of pie and keep competition out. This has also made the larger service firms power centers and doorways for smaller, niche firms to co share the revenue pie in larger accounts.
Contractually, this is making power centers in IT industry. Brining in margin pressure and passing on the risk and responsibility on service providers. The volume presence and assured tenure of business gives service provider a timeframe to strategically setup the shop under MSA and further pass on similar terms on smaller players.
While the MSA's operate at the org wide level, based on the nature of business sub segments and their price and demand prerogative, some organizations leave the choice of choosing the vendors on business sub segments. The catalogus of firms to work with at a broad level is fixed at org level. Vendor Management assures that all terms and conditions are met, rate card is looked into and any new vendor is not onboarded unless the service can not be provided by the chosen few. This keeps the web simple for vendor management.
Does this mean, services industry game plan is changing?? The small niche vendors, even large product providers will have to rely on service providers. They will be the door guards for getting in the right technology at right price and with minimal risks. Service providers for large accounts will have to work on mutiple alliances, taking on the right level of risks on their books and provide end to end services without compromising on their final service catalogue and organziational growth strategy. Interesting unfolding of events and interesting will be to see at what level the appetite to take risks will have to be monitored. The risk content on balance sheets of the large service providing firms is something to watch for in coming years. Sales people have to be extremely cautious and make the decision which lead to safe yet meaningful selling.
If you have observed, most large IT procurement organizations have consolidated their requirements to negotiate through one window and usually sign one large master service agreements with chosen few vendors who they trust with provisioning 60-70% of their BAU services. The consolidation helps them create volume and get better prices, it also in a way leaves the smaller contracts' resposibility on service providers by pushing them to provide end to end services. Many IT service firms are moving to liasion with Data Centers, product vendors, to create services that they can provide under the MSA rates and that can help them gain larger share of pie and keep competition out. This has also made the larger service firms power centers and doorways for smaller, niche firms to co share the revenue pie in larger accounts.
Contractually, this is making power centers in IT industry. Brining in margin pressure and passing on the risk and responsibility on service providers. The volume presence and assured tenure of business gives service provider a timeframe to strategically setup the shop under MSA and further pass on similar terms on smaller players.
While the MSA's operate at the org wide level, based on the nature of business sub segments and their price and demand prerogative, some organizations leave the choice of choosing the vendors on business sub segments. The catalogus of firms to work with at a broad level is fixed at org level. Vendor Management assures that all terms and conditions are met, rate card is looked into and any new vendor is not onboarded unless the service can not be provided by the chosen few. This keeps the web simple for vendor management.
Does this mean, services industry game plan is changing?? The small niche vendors, even large product providers will have to rely on service providers. They will be the door guards for getting in the right technology at right price and with minimal risks. Service providers for large accounts will have to work on mutiple alliances, taking on the right level of risks on their books and provide end to end services without compromising on their final service catalogue and organziational growth strategy. Interesting unfolding of events and interesting will be to see at what level the appetite to take risks will have to be monitored. The risk content on balance sheets of the large service providing firms is something to watch for in coming years. Sales people have to be extremely cautious and make the decision which lead to safe yet meaningful selling.
Sunday, October 3, 2010
Outsourcing Industry - Engagement Models
After having discussed the demand types, it is good to write on various engagement models that are prevalent in IT industry. IT industry essentially depended on technical know hows of its already set IT structure, or new ones to watch for. While some skills are available in abundance, for some the search is tougher as skills are scarce. Organizations have traditionally evolved in the way they give out work and manage them. We will discuss some that i can think of in order of maturity in this blog:
Staff Augmentation: The model is based on skill complementing for a firm. The overall responsibility of people and project management still stays with the outsourcing organization. This was essentially filled by independent consultants and contractors, but given the least strategic involvement, it is the safest bet to get started with outsourcing work without losing much control. This however, does not bring down the cost and also poses uncertainty related risks as vendor's liability and control is limited.
Managed Services: As the staff aug presence grows in a certain team, the management of uncertainty related to multiple lose ends from different organizations and their lack of liability to final aim, leads to project associated risks. There is requirement to take all contractors on the roll to give them common aim or to consolidate the staff aug under one umbrella which can manage the uncertainty, take the bottomline and collect the individual efforts to form a pool to provide robust back up and assurance to services. This type of engagement requires replication of a responsible organization, a small back up and one to one reporting and management with the outsourcing firm. While there is slight addition initially in terms of management overhead and pool, there are financial benefits drawn from more robust services, cross skilling and resilience. The services are more assured, focus of firm can move from staff hiring, managing and firing to final outputs.
Risk and Reward: Once the organizations mature under managed services, there is requirement to add "predictability" to services. This level of engagement has dependence on multiple factors like: fairness in vendor and outsourcing firm's relations, predictability in operations, mutual cooperation, clarity on roles and responsibility. All in all a long standing, stable vendor can take on the end to end management of its piece of work to deliver outcomes. The outcomes are reported to the outsourcing firm and if deviated from certain standards vendors are willing to take the risk and be penalised for it. This requires a very high level of working experience and stake holder management on vendor firm's part. This is increasingly becoming common in BAU services, where outcomes are of utmost importance.
Business Partnership: The engagement model expects financial commitment from both the vendor and the firm on IT initiates which they feel can be transformatory in nature. Vendor organization comes together with the industry and decide to co build a solution. There is fair level of financial investment and hence profit sharing to try a new idea which both organization feel convinced about. In such engagements vendors play a technical and cross industry expert role for its partnering firm, while firm provides industry process knowledge. The engagement is one to one with equal rights for both parties to drive the initiatives in right direction. Vendor organization has the right to share the IP and also market the same to recover its investments and gain more business in similar sectors. Most IT service providers gained early entry into government sectors and now in airline operations through these models. There could be partnerships in: taking on infra cost, setting up innovation labs, dedicated consulting teams, stake in captive enters or Go To Market together.
Advisory This probably is the highest level of engagement where by vendors take on the consultative role and participates with CIO organization in charting the future technology roadmap. The vendors play a key neutral role in providing the inputs on cost, efficiency, new technologies and also help firms move their BAU investment to new innovation portfolio. The vendors here talk to business, understand their drive and connect the requirements with technology. They participate in business case creation. The key is - vendors at this level, do not enter with aim of financial benefits only, they try to optimize the client organizations and drive their investments such that it directly impacts the revenue stream and hence justifies the IT cost. It has CIOs KPI on itself.
Apart from the ones listed above, there are multiple other engagement models that get innovated under risk and reward. Outcome based has become a buzz word. How effective and right these are, depends on context, maturity and knowledge of outsourcing organizations. There is no one size fits all answer. One essentially has to go through all stages in an account development span and a lot depends on trust and human emotions at play. The IT industry will evolve interestingly to pass on more and more responsibility towards the vendors with maximum head counts. The questions at play will be how to empower vendor organizations to take on right decisions and how to handle the conflict of interest which shall change as responsibility shifts. The Vendor firms will have to evolve to run multiple IT businesses as its own. The risk portfolio for them will increase and variety in business ownership will build on the cost. Where to draw the line? Which side to stick on to? Which processes to put on business platforms and make generic for firms and which specific ones to take on rolls for specific firms?? All these questions will become critical in coming times. Interesting times for IT vendors to define its boundaries. In the end, it should not be running the same IT departments, with all risks, no authoritative role and a stick on head on costs. The industry will have to stand up to chart a role for itself.
Staff Augmentation: The model is based on skill complementing for a firm. The overall responsibility of people and project management still stays with the outsourcing organization. This was essentially filled by independent consultants and contractors, but given the least strategic involvement, it is the safest bet to get started with outsourcing work without losing much control. This however, does not bring down the cost and also poses uncertainty related risks as vendor's liability and control is limited.
Managed Services: As the staff aug presence grows in a certain team, the management of uncertainty related to multiple lose ends from different organizations and their lack of liability to final aim, leads to project associated risks. There is requirement to take all contractors on the roll to give them common aim or to consolidate the staff aug under one umbrella which can manage the uncertainty, take the bottomline and collect the individual efforts to form a pool to provide robust back up and assurance to services. This type of engagement requires replication of a responsible organization, a small back up and one to one reporting and management with the outsourcing firm. While there is slight addition initially in terms of management overhead and pool, there are financial benefits drawn from more robust services, cross skilling and resilience. The services are more assured, focus of firm can move from staff hiring, managing and firing to final outputs.
Risk and Reward: Once the organizations mature under managed services, there is requirement to add "predictability" to services. This level of engagement has dependence on multiple factors like: fairness in vendor and outsourcing firm's relations, predictability in operations, mutual cooperation, clarity on roles and responsibility. All in all a long standing, stable vendor can take on the end to end management of its piece of work to deliver outcomes. The outcomes are reported to the outsourcing firm and if deviated from certain standards vendors are willing to take the risk and be penalised for it. This requires a very high level of working experience and stake holder management on vendor firm's part. This is increasingly becoming common in BAU services, where outcomes are of utmost importance.
Business Partnership: The engagement model expects financial commitment from both the vendor and the firm on IT initiates which they feel can be transformatory in nature. Vendor organization comes together with the industry and decide to co build a solution. There is fair level of financial investment and hence profit sharing to try a new idea which both organization feel convinced about. In such engagements vendors play a technical and cross industry expert role for its partnering firm, while firm provides industry process knowledge. The engagement is one to one with equal rights for both parties to drive the initiatives in right direction. Vendor organization has the right to share the IP and also market the same to recover its investments and gain more business in similar sectors. Most IT service providers gained early entry into government sectors and now in airline operations through these models. There could be partnerships in: taking on infra cost, setting up innovation labs, dedicated consulting teams, stake in captive enters or Go To Market together.
Advisory This probably is the highest level of engagement where by vendors take on the consultative role and participates with CIO organization in charting the future technology roadmap. The vendors play a key neutral role in providing the inputs on cost, efficiency, new technologies and also help firms move their BAU investment to new innovation portfolio. The vendors here talk to business, understand their drive and connect the requirements with technology. They participate in business case creation. The key is - vendors at this level, do not enter with aim of financial benefits only, they try to optimize the client organizations and drive their investments such that it directly impacts the revenue stream and hence justifies the IT cost. It has CIOs KPI on itself.
Apart from the ones listed above, there are multiple other engagement models that get innovated under risk and reward. Outcome based has become a buzz word. How effective and right these are, depends on context, maturity and knowledge of outsourcing organizations. There is no one size fits all answer. One essentially has to go through all stages in an account development span and a lot depends on trust and human emotions at play. The IT industry will evolve interestingly to pass on more and more responsibility towards the vendors with maximum head counts. The questions at play will be how to empower vendor organizations to take on right decisions and how to handle the conflict of interest which shall change as responsibility shifts. The Vendor firms will have to evolve to run multiple IT businesses as its own. The risk portfolio for them will increase and variety in business ownership will build on the cost. Where to draw the line? Which side to stick on to? Which processes to put on business platforms and make generic for firms and which specific ones to take on rolls for specific firms?? All these questions will become critical in coming times. Interesting times for IT vendors to define its boundaries. In the end, it should not be running the same IT departments, with all risks, no authoritative role and a stick on head on costs. The industry will have to stand up to chart a role for itself.
Tuesday, September 28, 2010
Outsourcing Industry - Analyzing Demand Segments
As a sales person in IT, there are some interesting market segments or rather demand segments that i came across and hence thought of putting it on my blog. In later blogs,i will further discuss on different engagement models which customers are demanding and how the industry forces seems to be pushing the industry towards stategic positioning.
In more cases than not, the realization is that the non core IT work can be outsourced to organizations who have larger pool of resources and hence capability to handle risks associated with uncertainity. The simple definition and expectation of this industry has made the startegic differentiation for firms tougher. For this discussion, we will simply elaborate on types of sevices.
Typically the demands to service providers come in following form:
Business As Usual Services - Process is key and Availability of services is critical - Maintenance and Support work. The demand is usually oriented towards technical skills and it is expected that client context will be built over a period of time. However, the project management is core to this work.
Business Process Outsourcing - Ideally this is where maintenance IT services should lead to. This is requirement to overtake the end to end non core processes and their IT infrastrsucture. Invoicing, billing, help desks, document generation etc fall in this bucket and soon there will be more and more processes moving into it.
Development - Requires industry and client context - This kind of work is usually in green field developments. This is usually completely new business process implementations' outcome. This might go beyond the client context. It requires consultative positioning. Brining in the larger context of similar business process in industy and then ability to tweak the solution to client context.
Operational transformation projects - Upgrading infrastructure, bettering databasing, replacing old applications with new or large scale integration and enhancements could be categorized under this bucket. As is visible, this work requires expert technical skills. Technical architects and consusltants form the core to these services and the ability to forecast client business demand and its impact on technical landscape is core to such services.
Product Implementation - Product and client business process specific knowledge - The demand requires niche development technical skills and strong business analysis skills. The combination is priced very high due to scare resources, but comprehensive solution packaging in products.
Pure Play Consulting - Primarily related to PMO, budgeting, IT portfolio budgeting, assisting customers in POCs, vendor assessment or RFP formation form the neutral consulting services which expert offshoring firms can provide. These are trust based services. Firms that understand the client context well and can take on neutral role in effective negotiations of client contracts and budgets settle well in these roles.
IT Driven innovation - Industry and client context - These services require proximity to business to understand its painpoint, larger industry context and larger technology back bone to be able to connect business with technical solutions. This is not a demand driven service. The service requires bringing in stake holders, risk reward based negotations and ability to build a convincing case. Also, vendor has to be high on trust and knowledge side to take on this role.
If you notice, i have knowingly built up my demand segments in a certain fashion. The types of demand that you are generating from industry or account is directly proportional to your ability to understand the industry and relevant IT context for the same. BAU is the lowest form of service sold in this sector. This demands lower cost and higher predictability. NO one will ask you to differentiate on "knowledge" as long as he can vouch for your processes. The real game players will be ones who move up the value pyramid and build the industry IT gap to reach to advisory position. If there is some additional dollar to be made with lesser, probably moving up the value pyramid will be interesting. We will discuss what could be possile hows in next blogs..
In more cases than not, the realization is that the non core IT work can be outsourced to organizations who have larger pool of resources and hence capability to handle risks associated with uncertainity. The simple definition and expectation of this industry has made the startegic differentiation for firms tougher. For this discussion, we will simply elaborate on types of sevices.
Typically the demands to service providers come in following form:
Business As Usual Services - Process is key and Availability of services is critical - Maintenance and Support work. The demand is usually oriented towards technical skills and it is expected that client context will be built over a period of time. However, the project management is core to this work.
Business Process Outsourcing - Ideally this is where maintenance IT services should lead to. This is requirement to overtake the end to end non core processes and their IT infrastrsucture. Invoicing, billing, help desks, document generation etc fall in this bucket and soon there will be more and more processes moving into it.
Development - Requires industry and client context - This kind of work is usually in green field developments. This is usually completely new business process implementations' outcome. This might go beyond the client context. It requires consultative positioning. Brining in the larger context of similar business process in industy and then ability to tweak the solution to client context.
Operational transformation projects - Upgrading infrastructure, bettering databasing, replacing old applications with new or large scale integration and enhancements could be categorized under this bucket. As is visible, this work requires expert technical skills. Technical architects and consusltants form the core to these services and the ability to forecast client business demand and its impact on technical landscape is core to such services.
Product Implementation - Product and client business process specific knowledge - The demand requires niche development technical skills and strong business analysis skills. The combination is priced very high due to scare resources, but comprehensive solution packaging in products.
Pure Play Consulting - Primarily related to PMO, budgeting, IT portfolio budgeting, assisting customers in POCs, vendor assessment or RFP formation form the neutral consulting services which expert offshoring firms can provide. These are trust based services. Firms that understand the client context well and can take on neutral role in effective negotiations of client contracts and budgets settle well in these roles.
IT Driven innovation - Industry and client context - These services require proximity to business to understand its painpoint, larger industry context and larger technology back bone to be able to connect business with technical solutions. This is not a demand driven service. The service requires bringing in stake holders, risk reward based negotations and ability to build a convincing case. Also, vendor has to be high on trust and knowledge side to take on this role.
If you notice, i have knowingly built up my demand segments in a certain fashion. The types of demand that you are generating from industry or account is directly proportional to your ability to understand the industry and relevant IT context for the same. BAU is the lowest form of service sold in this sector. This demands lower cost and higher predictability. NO one will ask you to differentiate on "knowledge" as long as he can vouch for your processes. The real game players will be ones who move up the value pyramid and build the industry IT gap to reach to advisory position. If there is some additional dollar to be made with lesser, probably moving up the value pyramid will be interesting. We will discuss what could be possile hows in next blogs..
Sunday, September 26, 2010
The Dying Behemoths!
The perfect org structure for my firm, my unit, my team or even the most basic form of organization "family" has been a debate for long. Most of the firms start small with minimal process, people and technology. As it grows in size the debate on company culture, startegy and roadmap takes its full form. In this blog i want to talk on one of the dillemas as heard of and discussed.
Biotech Firm:
-- Close friends get together in a huddle and raise the organization
-- Market is huge, R&D produces a chemical and it immediately finds the market
-- Marketing department feels that there is a better production which could earn better revenue, but R&D is powerful
-- there is lesser of what to do and what not to do discussion
Welcome to the world of extreme revenue focus, power reaching the hands of who knows to play it well.. But then the firm is too small and its growing.. competition is yet to creep in.. right or wrong money will come.. there is net net control on flowing in of revenue.. no one cares if with limited capability and size, more could come with less with better decision making..
Challenges that this will face:
-- Org will need process to put the right checks in place to focus and channelize energy in right direction
-- Experts shall have to play SME role and healthy friction between various departments will need to be created
-- Someone will have to watch competition, identify the strengths of the firm and start differentiating to sustain in long run
-- More and more people will need to share the vision of the firm to be enabled to take decision
Welcome to the world of perfect organization.. We all read about it right?? Then where does it fail?? Well, if you thought last point was last.. there you are.. a) Large organization do not share the simple vision like "making money and surviving".. b) People know how to run their own department, but they dont know what is it like to run the big jungle with so many diverse wild animals and ambitions because they were never empowered to go, kill or die..
There are few things which probably are key for an organization when it starts growing:
-- Vision dsnt change in business world, simple "Be among top 3 or die or diversify" -- thats one line vision of GE in a way..
-- Keep the business portfolio moving, know what will die and who will be the next star contributor.. INVEST in NEW, DIVEST from OLD.. Take a give and take approach, too much greed and emotional attachment to old is suicidal
-- Decision making and ownership should be embedded in DNA of a firm as thats the only way to survive the behemoth -- "You are the CEO of your sector and the firm" "You die if your department dies AND if my net value of firm dies"
-- No matter how much you codify, some people are core to business, they need to have resons to stick on and that has to be empowerment and ownership and not just money
-- Nourish the weaker child ( read new opportunties with future business) till it stands on its feet.. it will have to replace the older ones when they lose their feet
The organizations that stop growing are ones which get too emotional about returns, stop investing in newer opportunities and have a set of zillions of people who have never seen the real decision making in centuries spent in the organization .. In the end business is about survival, it will always be about that basic sacrifice you made on your minimal bank savings to set the foundations.. A growing firm is a set of smaller entrepreneurial sets which now run under one umbrella.. if you dont change, empower and invest you will die.. it was never meant to be constant and it always needed that "sacrifice" on your profits, that "risk taking" zeal you had to begin with..
Biotech Firm:
-- Close friends get together in a huddle and raise the organization
-- Market is huge, R&D produces a chemical and it immediately finds the market
-- Marketing department feels that there is a better production which could earn better revenue, but R&D is powerful
-- there is lesser of what to do and what not to do discussion
Welcome to the world of extreme revenue focus, power reaching the hands of who knows to play it well.. But then the firm is too small and its growing.. competition is yet to creep in.. right or wrong money will come.. there is net net control on flowing in of revenue.. no one cares if with limited capability and size, more could come with less with better decision making..
Challenges that this will face:
-- Org will need process to put the right checks in place to focus and channelize energy in right direction
-- Experts shall have to play SME role and healthy friction between various departments will need to be created
-- Someone will have to watch competition, identify the strengths of the firm and start differentiating to sustain in long run
-- More and more people will need to share the vision of the firm to be enabled to take decision
Welcome to the world of perfect organization.. We all read about it right?? Then where does it fail?? Well, if you thought last point was last.. there you are.. a) Large organization do not share the simple vision like "making money and surviving".. b) People know how to run their own department, but they dont know what is it like to run the big jungle with so many diverse wild animals and ambitions because they were never empowered to go, kill or die..
There are few things which probably are key for an organization when it starts growing:
-- Vision dsnt change in business world, simple "Be among top 3 or die or diversify" -- thats one line vision of GE in a way..
-- Keep the business portfolio moving, know what will die and who will be the next star contributor.. INVEST in NEW, DIVEST from OLD.. Take a give and take approach, too much greed and emotional attachment to old is suicidal
-- Decision making and ownership should be embedded in DNA of a firm as thats the only way to survive the behemoth -- "You are the CEO of your sector and the firm" "You die if your department dies AND if my net value of firm dies"
-- No matter how much you codify, some people are core to business, they need to have resons to stick on and that has to be empowerment and ownership and not just money
-- Nourish the weaker child ( read new opportunties with future business) till it stands on its feet.. it will have to replace the older ones when they lose their feet
The organizations that stop growing are ones which get too emotional about returns, stop investing in newer opportunities and have a set of zillions of people who have never seen the real decision making in centuries spent in the organization .. In the end business is about survival, it will always be about that basic sacrifice you made on your minimal bank savings to set the foundations.. A growing firm is a set of smaller entrepreneurial sets which now run under one umbrella.. if you dont change, empower and invest you will die.. it was never meant to be constant and it always needed that "sacrifice" on your profits, that "risk taking" zeal you had to begin with..
Friday, September 24, 2010
N=1 .. Does it work across the world?
In an interesting discussion with a friend of mine during this week, came an interesting thought. I was explaning about what i really appreciate in England.
-- N=1, customer and his requirement are heard to and marketing is core to this economy
-- Innovation for comfort and luxury has had a huge market
-- Educating people on products, process and invention is their way of honest branding
-- Quality is of extreme importance
-- All pros and cons are well thought through and incorported
-- Customer Service might not be high, but enabling customer is on higher side
I was generally quite impressed by the feel good factor that this consumer driven economy brings to people. It is so structured towards what will make one spend more. The success of business in here lay in the amount of populist support the product gains due to its features and mapping to direct consumers. Look at iPad, Europe is alway the first to experience and finds market instantaneously.
I started discussing on how this kind of market is now picking up in India and aiming at young earners and middle class. I was convinced about the focus of moving to N=1, but i wasnt convinced if it was as detailed as that in England and if Quality matched. This thought led me and my friend to enter into a new debate which proved that India is a unique market, sheer variety of customer, number of customers, culture, efficiency and negotiation power of even 2 year old kid.
-- Population and culture of India does not demand N=1
-- The market with all its increasing consumerism is still looking at balance in prices
-- People in India still like the "human" touch to services, a large population is still not educated or even if it is, reading does not excite many
-- India is a real tough market with a mix of all kinds of customers and buying cultures
-- Between volume and margin, volume at this stage is an easier target. The difference in revenue earned by targetting volume sales and premium margin sales, is high enough to justify volume market
-- BOP is a huge market in volume game and interestingly will grow in magin way by product differentiation
We concluded that marketing, business innovation and entrepreneurship in consumer driven products is very local.. strategies for GTM and hence even the product features weightage should vary for different geographies. The word Glocal made perfect sense.. processes, material producrement, management experience, may be labour and production can be leveraged across geographies, but ideas and innovation have to happen locally.. The Tata Nano, Zandu balm, Hero cycles.. they are all there to stay till someone nails the mindset of value vs price negotiation power of Indians.. :) So, if you are the marketing guy, you know India will challenge all your principles and learnings, as there are mutiple sizes that might fit one, but one size might not fit all..
-- N=1, customer and his requirement are heard to and marketing is core to this economy
-- Innovation for comfort and luxury has had a huge market
-- Educating people on products, process and invention is their way of honest branding
-- Quality is of extreme importance
-- All pros and cons are well thought through and incorported
-- Customer Service might not be high, but enabling customer is on higher side
I was generally quite impressed by the feel good factor that this consumer driven economy brings to people. It is so structured towards what will make one spend more. The success of business in here lay in the amount of populist support the product gains due to its features and mapping to direct consumers. Look at iPad, Europe is alway the first to experience and finds market instantaneously.
I started discussing on how this kind of market is now picking up in India and aiming at young earners and middle class. I was convinced about the focus of moving to N=1, but i wasnt convinced if it was as detailed as that in England and if Quality matched. This thought led me and my friend to enter into a new debate which proved that India is a unique market, sheer variety of customer, number of customers, culture, efficiency and negotiation power of even 2 year old kid.
-- Population and culture of India does not demand N=1
-- The market with all its increasing consumerism is still looking at balance in prices
-- People in India still like the "human" touch to services, a large population is still not educated or even if it is, reading does not excite many
-- India is a real tough market with a mix of all kinds of customers and buying cultures
-- Between volume and margin, volume at this stage is an easier target. The difference in revenue earned by targetting volume sales and premium margin sales, is high enough to justify volume market
-- BOP is a huge market in volume game and interestingly will grow in magin way by product differentiation
We concluded that marketing, business innovation and entrepreneurship in consumer driven products is very local.. strategies for GTM and hence even the product features weightage should vary for different geographies. The word Glocal made perfect sense.. processes, material producrement, management experience, may be labour and production can be leveraged across geographies, but ideas and innovation have to happen locally.. The Tata Nano, Zandu balm, Hero cycles.. they are all there to stay till someone nails the mindset of value vs price negotiation power of Indians.. :) So, if you are the marketing guy, you know India will challenge all your principles and learnings, as there are mutiple sizes that might fit one, but one size might not fit all..
Brand Beauty
It was a nice lazy friday evening.. i started back from office at 5 PM.. on my way back, i wanted to pick up something exotic to start my weekend.. i entered into the super mart and started checking out the shelves for something nice and soothing to eat or drink.. something in tea section attracted me.. it was a very attractive pack of tea.. i went closer to check on what was it.. this was tea with various flavors which is quite a big market in europe.. but this was something new, targetting the "organic and healhty" crowd.. as i held the pack in my hand, i could smell strong cardamom and liquorice.. i had picked up a detox pack.. retail being my passion, i went on hunting a bit more within the section.. i saw that this tea was priced almost 50% higher than the normal green tea that i buy.. but i just wanted it.. the marginal price difference did not look too much for a month's consumption..
Curious, i picked the pack, as i wanted to try this diffuser tea.. The curiousity has proven to be good, i guess.. i have a learning..
Here is what i saw how brands and commodities separate themselves out:
-- Certification from USDA Organic, Organic soil association and Kosher Parve
-- Detailed information on how i am different from other teas
-- Unique combination of ingredients
-- Elegant , soothing colors and packaging
This is "Pukka" detox tea for you.. It is an Indian sourced tea, marketed extensively in Europe and i must say, if you have it once, you would just want to try more of it.. its perception, attention to details and keeping eyes on niche markets.. they say your love and passion shows in everything you do.. looking at their product and then further into website and details, i feel entrepreneurship is about finding your passion and getting started to build it brick by brick.. in the end either you will find your way or you would have been through a journey which you shall never regret.. Not to forget India comes back to me in so many ways.. The old fashioned, un sophisticated farming is now a brand "organic".. its all about how you turn around the ideas to scarce practices in world.. :)
Curious, i picked the pack, as i wanted to try this diffuser tea.. The curiousity has proven to be good, i guess.. i have a learning..
Here is what i saw how brands and commodities separate themselves out:
-- Certification from USDA Organic, Organic soil association and Kosher Parve
-- Detailed information on how i am different from other teas
-- Unique combination of ingredients
-- Elegant , soothing colors and packaging
This is "Pukka" detox tea for you.. It is an Indian sourced tea, marketed extensively in Europe and i must say, if you have it once, you would just want to try more of it.. its perception, attention to details and keeping eyes on niche markets.. they say your love and passion shows in everything you do.. looking at their product and then further into website and details, i feel entrepreneurship is about finding your passion and getting started to build it brick by brick.. in the end either you will find your way or you would have been through a journey which you shall never regret.. Not to forget India comes back to me in so many ways.. The old fashioned, un sophisticated farming is now a brand "organic".. its all about how you turn around the ideas to scarce practices in world.. :)
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