Another recession???

We have been hearing that world has not really come out of recession and America is approaching another recession which is much deeper than what we have seen in 2008. Here is what Porter Stansberry says about expected recession... It may not be as bad as he predicts, but certainly its time for America to handover the power to Asian Giants... !!

Who is your competitor?

(Management Views from IIM Bangalore.. An excellent article - must read for every entrepreneur... )



"Have breakfast ...or.... be breakfast"!

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth.

Nokia confessed that they all but missed the smartphone bus. They admit that Apple's Iphone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question - "who is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast ...or.... be breakfast"! That sums it up rather neatly.

CK Prahlad - World's most influential management thinker 2009

Indian Mamangement guru CK Prahlad was voted as the world's most influential management thinker of 2009, by Suntop Media(UK)'s Thinker 50. With this he has earned the award consecutively for the second time after topping in Thinker-50 in 2007.
Malcolm Gladwell, the author of Tipping Point & Blink, was in 2nd position and Nobel Prize winning economist Paul Krugman held No 3 position.
Below is Thinker-50 list ( number in parenthesis indicate 2007 ranking):

Ganesha within us.....

People worship the god in different names expecting the gods to bless them with health, happiness, intelligence, prosperity and ultimately “Nirvaana”. We keep our gods in some heaven and we worship them to take us to heaven after death.

Ganesha is worshiped as the god of wisdom, knowledge and worshiped before starting anything new. We are experts in chanting many mantras to please gods to make us successful. Do we know the significance of these mantras? Have we ever thought how closely our gods are related to us?
Ganesha is not someone who sits somewhere in heaven blessing us with wisdom. Ganesha is the intelligence flowing through our body and mind.
Our intelligence gets cut into pieces (intellect) because of the junk stored in our mind. Enlightenment clears all these blocks and lets the natural intelligence to flow effortlessly. “Enlightenment is about aligning our conscious and unconscious with super conscious intelligence by being aware”.
Unconscious part of the brain takes billion bits of information per second where as conscious brain takes only 8 bits per second.
Hence the decision made in the unconscious intelligence and 8bps output goes as input to conscious brain which we think as decision maker. Also scientists have proved that it takes 0.5 seconds for this information to reach conscious part of the brain because of the junk we created with our past experiences and learning.

An excerpt from Ganesha Upanishads says “Twam mooladhara sthitosi nityam”. i.e. Ganesha resides in our base of the spinal cord. Opening up all our chakra’s starting from mooladhara lets the Ganesha flow through your body.

Let each living being in this universe experience the Ganesha within it.

|| OM ASATOMA SADGAMAYA ||
|| TAMASOMA JYOTIRGAMAYA ||
|| MRUTYORMA AMRUTANGAMAYA ||
|| OM SHAANTI SHAANTI SHAANTIHI ||

Franchising Vs Distributor/dealer model - Commitment Vs Risk ??

Franchising Business: A business model involving licensing of brand-name, trade mark and method of business/technology. There are 2 entities in this model:

1. Franchiser: Company which provides business model, technology, brand name and receives the royalty from franchisee for this offering. If you have an established business/unique technology/brand name, this is the fastest model to expand your business.
2. Franchisee: Person/Company which does the business using franchiser's brand name and business model. When you are planning to start new business without much investment and don't have plans to grow very big you can take the franchising of an established brand. This reduces your risk, investment on Research and development and guaranteed ROI as its a proven business concept.

Dealer-Distributor model: Method of selling the product/solution through existing dealer-distributor network. Dealer/Distributor gets some percent of commission for selling the goods and Manufacturer decides the final price of the product.
Distributor buys the product in bulk from the manufacturer and sells it to dealer who is a retail seller/sells goods to customer.

Though both franchising and Dealer-distributor models are methods for expanding a company's business rapidly, choosing the right solution depends on your business.
Franchising model is best suited -
- when you have multiple products
- when you have unique technology which cannot be copied easily without high investments, long development cycle, large investment on research and development.
- Need to build franchisee network (can use 3rd party services to build the franchisee network. eg: teamindiamangers)

Dealer-Distributor network can be used for selling your product
- When you have fewer products
- better way to sell by making use of the existing network

Franchising model reduces your headache of customer service and responsibility of marketing and sales. Franchisee is a small entrepreneur who is enthusiastic about the business. He believes in your business model and invests his money hence you need to give certain commitments to make his business work.
Dealer/Distributor doesn't worry about your business and is only interested in the commission he gets on your product. Hence you have to take complete responsibility of expanding the business.

Hence think building the franchisee network is beneficial when you have enough business, established model and resources to satisfy the crying baby(franchisee).

Commit only if you are able to satisfy it!!!