Stratoserve LLC

"Animal Spirits" by Robert Shiller- time to look across disciplines

 "Animal Spirits"  is a new book by Robert Shiller and George Akerlof. It's sort of interesting that Shiller  an Economist, refers to Psychology pretty often in this video from McKinsey and also throws in Sociology and Political Science in the context of the current "fear" among both businesses and customers. It's sort of interesting that Schiller does not talk about business disciplines at all in the video but I hope does talk about in the book. For example ,Marketing ( an academic discipline that explicitly recognizes economics and psychology as "mother" disciplines) , Management (which draws a great deal from Sociology and informs Operations that studies Supply Chain) and Innovation (which is a lot about "Spirit" the human kind!). The fact is that Economics is a dominant discipline and has an annual Nobel Prize while no other liberal arts or business disipline does. Globally economists have powerful influence  on public policy. And sadly, Econometric models without behavioral variables are unable to explain the current fear in the market as Schiller says. Time to look across disciplines !

Change in ancient cultures- "The White Tiger" by Aravind Adiga

 

Aravind Adiga has won the Man Booker Prize for his very first novel. Curious, I had placed a hold on the book at my town library and sure enough the book is in big demand and is on a strict 15 day turn-around.

Adiga has written a gripping tale and covers both India and China with the protoganist Munna  or "The White Tiger" writing from Bangalore as a now powerful taxi operator who provides taxi services to the call centers of big brand companies like Microsoft and so on. Munna is an "entreprenuer" writing to the Chinese Prime Minister (throughout the entire novel)  who is visiting Bangalore and wants to meet local Indian entrepreneurs to understand their story. The book is about Munna's evolution as an "entrepreneur" from abject  poverty based roots as a Rickshaw Puller's son.

The most fascinating thing about the book is the understanding that Adiga brings about the changing  ancient social structure in India. He does so in a sort of cynical manner highlighting rare betrayal by the servant of the master.  I rather prefer the lighter approach  of PG Wodehouse called the "feudal spirit"  where Jeeves is pretty much always loyal to Bertie Wooster. 

To Adiga's credit however, he does bring out continuity and change in the Indian social fabric as the economy booms and "catching up"  with China is on peoples' minds. Adiga's incredulous observation that dependable "servants" literally drive the economy is masterful. He mentions the diamond trade among others  where trustworthy assistants move around with millions in diamonds or cash with literally no "legal" controls and almost no problems. While "The White Tiger" or Munna is a deviant - you do get the feeling of continuity and stability in a  bizarre sort of way. Definitely worth a read.

"Hot Flat and Crowded" The ET industry

Thomas Friedman was on NBC with Tom Brokaw this morning on Meet the Press and was talking about his new book. Watch the video here.

I am a  fan of Friedman and of the flat world book. Tom Friedman observes the world and reflects and then tells us stuff which is absolutely compelling. In this interview Tom was calling for a new industry "ET" or "Energy Technology." Innovations in the energy sector has become absolutely critical. Why? Because each one of us is thinking about how to reduce energy consumption (have online meetings, merge errands, get a better oil burner and so on). The global market is simply hungry for energy innovations and Friedman's book is timely. Friedman is calling for hundreds of thousands of innovators in the "ET" sector who would come up with ideas and even if a few succeed as with the IT revolution,the world will be a better place. It'll be greener and better for succeeding generations.More on this, after I read the book.

Installed base and its supply chain as P&L Center

I had promised to read only fiction this summer and enjoyed John Grisham and Jhumpa Lahiri before lapsing to old habits of reading non fiction, for fun. Anyway I again  picked up "Execution - the discipline of getting things done" by Larry Bossidy and Ram Charan.

I am glad I did because the structure of big consulting,business school academia  and big businesses had me really puzzled for a while, because strategy,operations,marketing and supply chain are different vertical "silos." Supply chain is clubbed with operations or in rare cases with distribution and logistics in marketing. For example, you can't  easily find a partner in a big consulting firm who  is responsible for  both downstream distribution and  upstream supply.

In any case coming back to Larry and Ram's book. Towards one of the later chapters they casually drop an example of how if you have an installed base ( be it aircraft supplied or the more modest office copier) the supply chain for the after-market should be seen as a P&L center for the future. They in fact do not use the term marketing at all. How insightful and integrative is that ? More on their HR views later .....

The Conceptual Age - reporting from ISM 93rd Conference St. Louis

Just returned from a wonderful conference - the ISM 93rd at St. Louis. St. Louis is a nice place and the conference center was great as was the metro train transportation which I used to check out a surprisingly great Indian Restaurant, Rasoi.

There were many great sessions throughout the conference and I will probably allude to them in future posts. However, Daniel Pink as the lunchtime speaker on Monday simply resonated with me and many other participants. Pink did not probably say something totally new but did manage to convey his message really well.

In a nutshell, Pink said that three things were changing our world, particularly in the developed West. These were Abundance, Asia and Automation.  His illustration of abundance was rather neat in that the rather new self storage industry is for the extra "stuff" we have gathered and the self storage industry exceeds 22 B $ and is larger than Hollywood. Asia  and the impact of China on manufacturing and India on services is well known as are the burgeoning markets and aspirations in these countries.  But it is automation that is the clincher of  the "conceptual age". If it can be codified and written down it will be either outsourced or automated, preferably automated. Interestingly, it is not Indian accountants that took over all the tax returns but the 29 $ software you can buy at Wal-Mart to file your taxes. Why would you pay 100+ $  to a tax preparer ??

This leads to Daniel Pink's thesis that it is necessary to have a prepared left brain that is analytical, sequential and is geared to doing well in the SAT. However, the left brain alone is not enough because by definition what the left brain can do, can be codified,written down and then outsourced and finally automated. So beyond the left brain is developing the "conceptual" skills of the right brain that 's about synthesis, modeling and innovation in your field of expertise no matter what your "left brained" expertise is. Very interesting and provoking and so thought many of the participants I talked to.

Netflix and the Long Tail....

I was teaching my MBA students about New Service Development and had some trouble with the DVD player when I tried to show a film about Netflix.... so I happened to look for "Netflix Business Model" in case there were any relevant videos on YouTube. The You Tube stuff did not look like the informational stuff I wanted to show. We got my Netflix video to work with the help of a student's computer, and I got home after a rather long day and happened to just look at the search result from YouTube.

The title of "Long Tail .... " had jogged my memory but watch the video here.

Chris Anderson offers the idea that the digital age provides unlimited distribution possibilities with digital supplies or a combination of digital and physical distribution. Consider the point that movies don't reach the movie theaters because there are constraints on movie theater distribution capacity. Netflix extends the number of movies that are available. Similarly for music with Walmart at 25,000 tracks with iTunes at 2 Million tracks and probably a total of 25 million tracks out there that'll come online , according to Anderson. Also similar logic for brick and mortar bookstores when compared to Amazon.This long tail involves many many micro market segments that were difficult to approach before the Internet and the "Flat World." So in contrast to the 80:20 rule Chris Anderson suggests that the long tail will make many many more markets viable for products and ideas that never had a chance due to capacity contraints in the physical world. Consider, that you are seeing this idea right now on this blog before you read my more detailed take in scholarly print (which might take years !) on Chris Anderson's rather neat idea....

Herb Kelleher and aligning supply chains with business strategy

"We are THE-low fare airline" said Herb Kelleher to succinctly capture the strategy of South West Airlines. The Heath Brothers call this "Commander's Intent" in their new book "Made to stick." Once you have the commander's intent simply defined , everyone else in the organization and stake holders expect and do things that match up with the strategic intent. The Heath brothers go on to explain (pg 29, quoting from Carville and Begala) that suppose a market research executive came in with customer feedback and suggestion that chicken Caesar salad would really make the Houston-Vegas passengers happy. Herb Kelleher would simply measure whether this helped or did not help the strategic mission of "We are THE-low fare airline." Obviously the streamlined, literally low cost South West peanut supply chain  would win every time over chicken Caesar salad. And whoa! you'd ignore customer feedback..... and stay with peanuts! Customers will keep coming back.....

Having just read the above I had to agree with the Manufacturing Insights-IDC's recent research that mis-alignment of supply chain with corporative objectives is a big problem in industry. Increased quality and customer satisfaction is the top priority of supply chain executives and not low cost alone. No one wants to recall Colgate. 

The supply chain digest is provoking its readers to respond to the "low cost" priority and it is precisely this low cost orientation that has left executives in the upstream supply chain i.e. the supply managers and the downstream distribution channel i.e. sales managers responsible for distribution out of the center-stage in the company. As soon as these value chain mangers start figuring out that they add value and don't simply reduce cost these managers  and their companies will do better.

Harry Potter and the Deathly Hallows

The last Harry Potter book, i.e. as of now, is getting launched in the US at 12.01 am i.e. in less than 9 hours. People are queuing up and you know things are serious and global when average book sellers from New Delhi are giving long TV interviews about the prospects of this and related books. Guess the book is launched in New Delhi and points east. And then there is the whole secrecy thing with JK Rowling, the author imploring people not to reveal the ending and be a"spoiler." An account of the global roll-out is here. Amazon.com is teaming up with UPS to deliver 1.3 million copies as their largest ever print run. Forbes painstakingly reports the fortunes of related organizations like the publisher 'Scholastic" and the various new plans that folks in the hard book business have to come up, now that Harry has grown up. For example, there will be a 7 pack gift set this holiday season for "muggles" who  will actually  admit to having not read the stuff ! Well there is marketing hope here, as the product will be called a "collectors edition."

On the ground, its interesting to see that the grocer "Stop and Shop" has the book on its weekly flyer and assures patrons that being a 24 hour operation is really going to help-this time. Was at Barnes and Noble a few days ago and they had a rather large tear down calendar with no. of days to go till launch and the University book store sent out a message that the book will be available despite the rather relaxed summer scene. Consider, that we had all thought that books and print will decline with the Internet , online shopping etc. On the contrary the Internet has actually fueled the  print industry with more  "brick" book stores and book sections  at various stores , "spoiler' videos on the book plot, lots and lots of buzz on community sites ,blogs etc. Best of all, kids worldwide are reading more than ever before.

GTD and Knowledge Work

I found "Getting things done" (GTD) in the Time Magazine recently and have been studying and implementing it for the last two weeks. In fact, GTD has been keeping me away from this blog...

David Allen explains GTD in his book and this has really taken off as a great methodology to improve personal productivity-without stress. Consider that there is an aggregator GTD index website and numerous tagged sites. David Allen and his many "followers" are onto something interesting that's probably looks appropriate for the emerging global knowledge economy.

GTD has simple principles  and yet  I find them profound for the knowledge economy and its workers -a tiny section of whom are also known as "Geeks". The point I am trying to make that in the knowledge economy you may not be a "hard core" geek writing code but you have to be somewhat geeky to even do the old world stuff. And what makes GTD remarkable is that it reduces mission and vision at the individual level to individual do-able action items. It also aggregates the new world view that you are "one person"  at the individual level and "one organization" at the organizational level ( I owe this idea to a talk I heard at the GNHCC  from Joel Podolny ) and might work from anywhere using cell phones,PDA's, the Internet or by actual physical presence.

But most importantly, knowledge work is essentially unstructured particularly at the early stages and GTD lets you get your arms around it. Once you  actually write down and classify everything you have to do then life can really become less stressful and much more productive... I have a long way to go- but have made a start.

Customer Service across Countries

It is great to be back in the US. British Airways turned out to be quite nice with a very large bunch of customer support people at the Indira Gandhi International Airport, Delhi. They had a separate gate and from 4 am there were young customer service folks at every step: getting your baggage screened; helping you through immigration; moving folks through security including such friendly tips that coffee is available after security but if you need to eat- buy and carry food, before security. Naturally, I found this new but just wonderful customer service one more instance of the "diffusion" of the customer service ethos that is spreading in India. British Airways at Heathrow was good but had simply fewer people and when one of our bag handles  were torn at Newark we had a hard time finding the BA office and the person was tired ( almost mid night) and pointed at the notice which says that torn handles are not covered as loss. Surprising because I remember at least one airline ( probably Japan Airlines) which did replace a busted bag in the past. My experience at three airports with the same airline, this time, was different. Quite simply while in low cost countries airlines  can put more people on the customer service job it is probably not cost feasible to do so in higher cost countries. I predict that in the future business processes will make up the service gap - thus you might call a 1800 number or go to a website for damaged/lost luggage issues. Once "globalized" via a telephone or Internet service can be provided more rapidly...

It was therefore with some amusement that I read the book review of THE BACKROOM BRIGADE: Seetha; Penguin Portfolio; 11, Community Centre, Panchsheel Park, New Delhi. In my own interview with Raman Roy about three years ago I had come abreast of the role of American Express and John Macdonald. Apparently, John made a comment in the 1993 India meeting that the revenues from India were less than the stationery expenses in the New York office. He was amazed at the very low ratio of operations costs to revenues. They decided to shift all SE Asian work to India. This was before the Internet ...after which things changed totally.

As I observed during a midnight visit to a call center operation at Delhi - the workers were actually happy. Happy making outbound calls to UK phone customers. These kids saw their jobs as careers and Indian HR managers are in a tizzy trying to work out career paths that will help retain the best employees. The jobs that Indian workers do happily are derided as "cyber coolie" jobs according to Seetha. But happy service workers and many of them working will keep customer service up to speed  and customers happy. Seetha mentions that eLoan offers India processing of loan applications in one day and US processing in two days. 85% customers prefer the one day processing.