VALUE CREATION APPROACH- THAT BUILDS EVERLASTING COMPANIES..

BUSINESSES ARE SUSTAINABLE AS LONG AS THEY CREATE A NET POSITIVE VALUE ..


If the purpose of a business is to create a net positive value for the stakeholders, the Value Creation approach differentiates, true Business Persons from Busy Fools.
A 'Busy fool' is one who toils away hard at work for hours but either fails to generate any value from his work or creates a net negative value.


Every action or a decision taken in an organization could be value accretive or value destructive. When the net value of the actions taken are value accretive in the long run, businesses prosper and continue to grow.

Successful organizations know that the purpose of any business is to create value for their investors, employees, customers, suppliers and the society. Sustainable value can be created only when all the elements of the corporate eco-system get a perceptible share of the value created.

The Total Value created by an organization is generally equal to the sum total of :

a) Value to consumers ( perceived benefit less the price paid),

b) Value to Suppliers ( Cost paid to suppliers less the costs incurred by the suppliers)

and 

c) Value to the firm ( Price realised from customer less Money paid to all suppliers and Vendors less sum total of all expenses incurred in the creation of the products and services.

The term generally used globally to understand the value created by a firm to itself is quantified by EVA,defined as follows:

EVA (economic value added) is the measure of output (taken as operating profit after tax and some other adjustments) less input (taken as the annual rental charge on the total capital employed, both debt and equity). 

As long as the EVA is positive and increasing, the firm is said to be creating value  and if EVA is decreasing or negative, the firm is on the down-trend and continuing in this trend may one day lead to the non existence of the company.

Successful Organizations assess the effect on the EVA of the organization when they undertake any major investments.

It must be however noted that focusing purely on the projected EVA in the short term may be detrimental to the long term value creation process of the organization.

For example when the firm prices the products too high, their sales volumes could be adversely affected as the price may be more than the perceived benefit of the product by the consumer or the price the competitor is charging.

This will result in significant variance from the sales projections leading to piling up of inventory and blocking up of working capital. Hence the EVA projections can go haywire and the company could end up destroying the value in the process.

For example in 2004, Nokia launched value for money branded mobile phones by crashing the price-lines by over 40%. This has led to a huge surge in volumes by 3-4 times in a span of 12 months leading to tremendous value accretion. Thus while precise estimation of the effect of the company's financially linked decision are not possible always, a calculated risk with a time-frame in mind is often taken the companies to assess the net value added

Similarly, BPL slashed the price of its double cassette audio model SW138 by 50% in 1995 to clear excess inventories. The resultant surge in the sales of the model and its impact on the market share of BPL in the market, resulted in a drastic improvement of overall sales and financial performance of BPL-Audios w.r.t competition like Philips thus adding a positive value. Economies of scale often have a suppressing effect on the costs and the resultant competitive pricing will be perceived positively by the customers when the selling price is lower than the benefit they perceive.

It can be understood that the factors like demand supply scenario for the product/service in the market place, strength of the competition, efforts required to communicate the proposition to the customers have a direct bearing on the value created by a company.

In a sellers market for example, the petrol market in India, where the demand is forever exceeding the supply, the organizations stand to create a huge value for their stakeholders due to their control on pricing without affecting the demand.

However when the supply far exceeds the demand, the companies with strong brands and significant competitive edge are able to enjoy positive value addition while the me-too companies struggle to survive. Innovation and strong marketing thus add a significant value and aid in the value creation process.

Organizations focused on value creation often explore ways to enhance the size of the market addressed by the products and services as the resultant increase in sales will lead to a better demand-supply scenario thus increasing the price realized from the customers leading to higher value.

Value focused companies do not believe in squeezing the suppliers too much or compromise on the quality of the raw-materials used as this may have a negative effect on the quality of produce as well as the perceived benefit to consumers, resulting in lower pricing and value destruction.

Net additional value creation is an important parameter that not only influences critical corporate decisions like Mergers and Acquisitions. Any corporate acquisition or takeover that results in a negative net value added due to parameters like high cost of transaction, inability to economise on common areas of expense, increased expenses due to problems associated with a more complex operation etc. will lead to destruction of organizations. Kingfisher Airlines' acquisition of Deccan Airways has resulted in a value destruction of over 75% due to negative value added.

Successful organizations have a long term and strategic perspective to value accretion in each of their activities and thus in the long run create huge values for the stakeholders and society as well.

LEVERAGING TECHNOLOGY FOR COMPETITIVE EDGE...

   TECHNOLOGY- A CRITICAL LEVER FOR GROWTH AND COMPETITIVE EDGE..

 Give me a lever long enough and a fulcrum on which to place it, and I shall move the world – Archimedes

Successful organizations have learnt to leverage the Power of Technology to the hilt and continue to stay ahead  in the race for leadership by innovative and effective use of Technology.
Growth of the use of Technology in Communication, Banking, E-Commerce, Travel, Enterprise Resource Planning, Automating various facets of the company, Marketing have led to tremendous improvements in productivity& profitability for the companies and high value for money for the customers.

While the mobility of the workforce is empowered by the use of mail on the move, tele-presence, live video connectivity and ERP lets organizations manage and enhance productivity in resource utilization most effectively, the most critical use of Technology has been in the field of studying the customers, users, maximising the life time value of the customers , providing enhanced user experience and marketing efficiently to the customers by leveraging the digital media.
The advent of Cloud Computing and Service Oriented Architecture has put the power of technology in the hands of small companies and also reduced the resource requirement for creating  new products and services in the technological domain.
Today small enterprises are able to rapidly develop and test their ideas with limited resources while large organizations are able to quickly deploy IT services within their organizations with a limited investment in hardware and complex appications, thanks to the advantages provided by the Cloud Computing.

Some of the trends in the use of Technology by the thriving companies are as follows:

i) Automation:   Automating various aspects of the operations like manufacturing, service delivery, campaign management, especially the routine and repetitive operations that do not require customer interface will help in reducing operating expenses, enhancing precision and in improving predictability & productivity.
Enterprise Resource planning enables the organizations to leverage technology for most productive management of all resources.

ii) Studying & Analysing Customers:  Technology empowers the organizations with its ability to crunch large amounts of data and make sense for enhancing user experience, getting right products in the right place, improvements required in the delivery of the proposition, cross selling opportunities to enhance life time value of the customers.
With the explosion in the Social media space and tremendous increase in the user generated data globally, the task for today's organizations is not only to keep track of the data but also to make sense of it to help them in getting most value out of it from getting more business point of view and staying ahead of the competition. BIG DATA ANALYTICS is the upcoming area of information processing and knowledge management that is being leveraged the thriving companies in the race for leadership.Big Data Analytics helps organizations in crunching large set of data in a limited time to makes sense of it for productive use. This will help them in studying the customers and operational information at frequent intervals and more widely across the organization ranging from offices,places to plant to customers and also segment and target customers with precision in a more customised manner. This will help the organizations in attaining dramatic improvements in productivity and profitability by helping them to save wasteful expenditure, develop new products as per customer needs at a faster pace, enable cross selling to mine the customers better, enhance customer service levels, increase efficiency and quality of operations by acting on feedback etc..
Keeping track of customers who visit your websites and increasing conversions out of abandoned shopping carts, fans and followers is greatly enhanced by the use of data mining and analysis.

iii) Engaging with the users and the customers: Technology empowers the organizations to engage one on one with their customers and users. Through websites, social media channels, one to one advertising, the organizations are able to reach out to their customers to tailor make their products and services as per the needs of the consumers. Today, tablets are being used at the retail level to give a better idea about the menus to customers and explaining the technical details better at auto showrooms in a comprehensive manner. Augmented reality is being used to leverage multimedia in enhancing visual experience for a better feel of the products and services to the customers. Technology is surely a very big lever in enhancing user experience through innovative engagement techniques.
iv) Marketing and Reaching out to Customers: Technological advances and innovative organizations have enabled marketers and advertisers to precisely segment and target the individual consumers with measured responses that has dramatically improved the effectiveness of advertising and marketing investments. As companies and publishers collect important information like demographics, tastes and preferences, psycho-graphic details  through the online behavioral patterns, about their users, members and we site visitors, the marketers and advertisers are able to deliver targeted campaigns.
Techniques like Email marketing, Affiliate Marketing, Search Engine Marketing Targeted Banner Advertising, Pay per click, Pay per action,Social Media Marketing, On-line Public relations, Video advertising, mobile advertising through the web to targeted customers.
Use of mobile applications to engage with the customers and reach out to them through location based advertising and services has led to micro targeting opportunities.
Affiliate marketing is effectively used by large e-commerce organizations like Amazon to rapidly scale operations across the globe.
Thus the most innovative and technologically pro-active companies are able to converse, engage, empower, entertain their customers on the web thus enhancing their lifetime value for the business.
Technology has empowered the creation of viral buzz that allows good words or bad words to travel fast through reviews, recommendations, mentions in social media, blogs and in media sites. This instantaneous transmission of information and multiplication has helped in creating huge business opportunities and also huge failures. The power of the viral buzz on social media could be gauged by the fact that, this is supposed to have helped Barack Obama in gaining edge in US Presidential Election Campaign-2008 and also in the fall of powerful and autocratic rulers in the Middle Eastern countries like Egypt.

Organizations can also earn substantial additional income by monetizing the traffic that they get on their websites through ad placements, cross promotions etc..
On-line Reputation Management is actively pursued by the successful organizations of the 21st century who monitor the reputation of the company across the important on-line platforms and take action for speedy resolutions of complaints and negative mentions where-ever and when ever they occur.
The increasing pervasiveness of technology in today's operations has also brought along with it, threats related to information security, virus attacks, confidentiality and the need to create backups and safeguards to ward against such lapses. Further inefficient use of technology also brings in duplication of efforts and wastage of valuable resources including time and money.

Hence it is indeed a challenge for today's organizations to manage their digital presence and also to leverage technology to the hilt in making best of the opportunity presented by the ever-changing technology landscape.
This requires the dedication of the top most management and also high quality resources at the senior levels.
Thriving organizations have managed to be always ahead in this aspect of 'Leveraging Technology' for maximum benefit and gaining consumer affinity.

GREAT EXPERIENCE-- THAT RESULTS IN ACCELERATING GROWTH

                             GIVE A GOOD EXPERIENCE-  GET LOYALTY
                        GIVE A GREAT EXPERIENCE- GET AN ADVOCATE

Successful Companies have realised that while the attention spans have gone down for people with their employers and  suppliers due to the multiplicity of options competing for their attention, it is the quality of the engagement you do with these important stake holders in the business that differentiates great performance from the poor.


Engagement and Positive Experience are the new mantras of success in the 21st century...


HAPPY EMPLOYEES + DELIGHTED CUSTOMERS = EXPLOSIVE BUSINESS GROWTH


A Positive Experience will provide not only a reason to repeat the experience but also leads to a viral effect of recommending to the friends, relatives and social circles thus leading to an increased equity and more business.


Citibank,one of the finest global banks that has survived many ups and downs through its life of over 200 years,is a great example of what a positive customer experience can do to an organization. Customers who have used the credit cards of Citibank for over 20 years have found the experience to be consistently excellent and recommendation worthy.
Apple Computer achieved great strides as a global Technology company with the innovative features of its operating system and cutting edge products that consistently provided superior customer experience which were copied by their competitors.
Google surged far ahead of its older rivals and astonished their competition with their motto of providing best possible user experience. By providing a 'Search' facility that was faster, reliable and more relevant to the needs of its users, Google consistently increased its lead over some of its finest competitors like Yahoo and Microsoft to unassailable levels.

Happy customers who have their problems resolved will tell 4-6 people about their positive experience. Source: the White House Office of Consumer Affairs, Washington, DC.

In his book 'How to win customers and keep them for life', Michael Leboeuf has stated some interesting facts as a finding from his research:

1% die
3% move away
68% quit because of an attitude of indifference towards the customer by the staff.
14 % are dissatisfied with the product.
9% leave because of competitive reasons.



It is important to see the importance of 'ENGAGEMENT' with the customers that will help in retaining over 60% of the business effectively giving a potential to double the business with minimum effort.
Customer loyalty is, in most cases worth 10 times the price of a single purchase. Source: “Understanding Customers” by Ruby Newell-Legner


With the advent of Social Media on the internet and the empowerment of the individual consumers to influence large circles of potential consumers with viral effect  through blogs, reviews, facebook,twitter and corporate sites apart from the traditional channels which are generally non viral and limited, in reach, organizations that have effectively provided enhanced experience and get a net positive word of mouth ( reflected by a Net Promoter Score) creates a platform for success in today's competitive market scenario. This catapults great organizations to leadership and helps them thrive in today's networked economy.


How do we define Customer Experience?
Customer experience (CX) is the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. From awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy. It can also be used to mean an individual experience over one transaction; the distinction is usually clear in context.- Wikipedia


A customer or an user interacts with a company, its products and services at various 'Touch-points' through personal visits to stores- online and offline, chatting on the web, interacting through queries and complaints on the phone, apart from other one to one interactions with various employees/ parties partnering the companies in their delivery.Stores are increasingly becoming a touch-point for a discussion about the evolution of marketing from traditional, one-way communications to building great brand experiences that people can immerse themselves in and share and live in.  A great brand experience is direct and transformative. It’s not a fantasy. It’s not the idea of something. It is something, something worth writing home about – or at least texting a friend.
 

It has now become imperative for the organizations to take a holistic view of the Customer Experience through the life-cycle of the interactions across the various touch-points with the company from awareness to interaction to purchase and post purchase.
By delighting  the customers through the life-cycle of the relationship and  by providing excellent service making periodic contacts through courtesy calls, wishes, incentives, schemes etc.,companies aim to convert the customers from being loyal to advocates thus increase the life time value of the customers to the company.


Swarovski, one of the greatest brands and the leader in the business of cut crystals and luxury products, uses experiential marketing techniques to promote its products through its premium retail chain of stores. A study of Swarovski's strategy reveals the following action plan for promoting exclusive products to premium clients:

1. A great brand experience begins where the story telling script ends, because it’s not the brand’s story. Experience is user’s story. The brand is only the stage manager. The most potent experiences are open-ended. They are worlds that people can explore at will, and that permit many outcomes. The outcomes belong to the user, not the brand and are called  memories. Swarovski, infact launched a range of products called Crystal Memories depicting various memories like annual occasions like birthdays, once in a while occasions like vacations etc.

2. Create an adventure. Great brand experiences are exceptional. They occur when the brand and its user are both participants in a new adventure.

3. Make the user count, Don’t just count users. People want to be recognized. They want to be the heroes of their own lives and to connect with others and have an effect on their world. A great brand experience is one that is not only personal, but that makes people individually indispensable to the result.

4. Brands are bonds. Traditional marketers think of the brand as the destination in every story. An experience that makes your brand be the change in people’s lives can create ties that last a lifetime. What aspirations can you and your users share? Big ideas come from big ideals. Ideas only give you share of mind. Ideals give you share of culture. A great brand experience can put ideals into action.

5. Live the moment. The moments that truly rock our world are more precise. People measure the potency of events by memory: by where we were when (we bought a Swarovski). Experiences that are anchored to a place and time carry a greater emotional charge

6. There is no long term.. There is only now. Most engagement strategies end up guiding people along to a sale. A great brand experience doesn’t happen somewhere. A great brand experience is not a promise. It is its own proof – on the spot – and its own reward.

7. Use the touch points that matter most. The most powerful media channels in existence are sight, sound, touch, taste and smell. Every sense you can engage doubles the number of consumer brain cells that register your brand experience. This is why a great lover will send you roses or chocolates instead of emoticons!!

8. Refresh,Renew,Repeat  Every marketer knows the importance of that last word, “repeat.” The most valuable brand experiences are those, which the consumer can repeat with equal delight, or that inspire continued exploration, connection and sharing with the brand. Otherwise, what you have is simply a transient stunt. The trick we strive for is to create an experience that has a surprise that lives – and grows – forever

To summarise, the ultimate brand experience is a continuing story and experience and like a long term marriage and not a one night stand!!

Today's customer focussed organizations have a clear-cut strategy and a number of tools to pro-actively manage their customer relationships and enhance the user experience.

The tools encompass some of the following activities:

i) Define the parameters that reflect the customer experience. For example, the ratings of the customers on the services provided by the company across the touch points.

One such parameter is the Net Promoter Score that is defined by the net of the positive opinions to the negative opinions expressed on the web.

ii) Consciously strive to provide excellent quality of interactions with low tolerance to failure across the spectrum of interactions.

High Quality Retail Ambience and Accessible  locations for offline companies and user friendly interfaces provide the hard elements of the experience for customers while the competence, behaviour, responsiveness and the sensitivity of the employees handling the customers providers provides the softer elements.

iii) Measure the various parameters continuously to keep track of the improvement or deterioration of the company across all these parameters.

This involves listening to the customers intensively and extensively and asking for feedback on regular basis.

"80% of complaints received by an organisation are likely to have poor communication as their root cause, either with the customer or within the organisation itself. Source: Unknown"


iv) Take action consistently to reinforce positive experience through rewards and rout out negative experience through remedial measures.


Once the feedback is received, positive feedback could be used as reference to promote to new customers and reinforced to build better bridge with such customers providing positive feedback while negative feedback should be immediately acted upon and the remedial measures undertaken.

"56%-70% of the customers who complain to you will do business with you again if you resolve their problem. If they feel you acted quickly and to their satisfaction, up to 96% will do business with you again, and they will probably refer other people to you. Source: the White House Office of Consumer Affairs, Washington, DC". 

While Loyalty cards and special offers are repeatedly used by companies to get the customers to do repeat business, companies who work on delighting their customers by working on the Quality of products and services, Value for Money and in providing excellent support to their customers get not only repeated customers but also a positive viral buzz that widens their gap with the competition.

KNOWLEDGE ATTITUDE SKILLS HABITS- KASH FOR PERFORMANCE AT WINNING ORGANIZATIONS..

               Habit is what we repeatedly do and is what truly defines our capability to perform.

               Positive attitude and Good habits of the employees are invariably the reason behind

               the performance of Great Organizations..

          

In today’s world, if anything is in shortage it is Quality manpower!!. This is especially true in large population especially from countries with diversity like India!!. Sounds contradictory, the more there are people to recruit from, the tougher it is to choose the right kind!!.

Each employee brings 4 distinct characteristics to an organisation – Knowledge, Skills, Attitude and Habit.

Knowledge – How to do things

Sills – How well to do things

Attitude – How the employee comes across to others while carrying out his tasks

Habit- How he normally does things, repeatedly and consistently without any effort.

While most of the organizations focus on selecting employees based on the knowledge and the skills they possess, successful companies differentiate themselves by focussing not only on the Knowledge and Skills possessed by their employees which are more defined by the left side of the brain, but also on those soft aspects of the personality that are defined by the right side of the brain, namely the Attitude and the Habits.

Knowledge is sum total of learning, theoretical and practical, that an individual acquires over a period of time and is a building block for the competence and success of a person in his career and corporate life. Knowledge of the subject, environment, general matter etc form the building blocks for the ability to understand, internalise and deliver on the performance objectives.

Skills are those capabilities and competencies that are gained through experience and learnt through practice. Technical skills, Communication skills, Analytical skills, Presentation skills are some such skills that will help the employees in their communication and delivery of performance.

While K&S are important, the ability to put them to use is defined by the Attitude of the professionals who possess them.

Attitude is the outlook and a perspective that an individual develops that will help the individual in leveraging his knowledge and skills and perform in the work place.

Attitude determines the Attitude…Anonymous

A negative attitude will result in the professional not only unable to deliver his performance but also come in the way of those around and the organisation overall as a cascading effect. While a positive attitude will help the individuals to galvanise themselves and those around to give their best and try to maximise the performance.

Habits are those aspects of our behaviour that reflect what we do repeatedly and believe deep within.  Successful Organizations want winning to be their habit. Success is a product of doing the right and desirable things repeatedly. This happens when the employees are habituated to work hard, work smart, work systematically and perform consistently.

Successful organizations realise that it is the negative attitudes and wrong habits of the employees are mostly the reasons behind the failures and not lack of knowledge or skills.

Training programs at successful organizations are focussed on improving all the four aspects of the employees and fine tuning them to enable the employees develop a healthy attitude and get habituated with desirable traits by the use of various forms of motivation and reward systems, apart from a periodic assessment and up-gradation of knowledge and skills.

When the older companies were set up, the workforce – both “labour” and “management” were from similar socio economic backgrounds. An employee is slotted as manager or managed based on his/her education/knowledge and skills alone as the attitude and habits were more similar than diverse. Hence culture got built more easily in older companies in the yester years. It is more difficult today.

Attitude and Habits differ based on the socio economic backgrounds of people.

Habits are usually very difficult to break and a smart organisation leverages on the habits of effective people to make it an organisation habit and later on, it becomes the culture of an organisation. A great example can be seen in Asian Paints, one of the top 10 paint companies in the world and it is totally Indian. It is Asian Paints culture to take detailed notes in all meetings whether with dealers or otherwise. The action points are clearly highlighted and the same is reviewed in the next meeting. This is a habit and now is a part of the culture of the company. The culture is one of being mindful of even the smallest detail and hence the company is just and plain efficient and therefore dominant in its operations!!

Attitude is a more individualised trait and is even more difficult to leverage on for creating a successful organisation. Asian Paints recruits over 200 fresh graduates from top management and engineering schools as trainees every year. To ensure that the individual’s attitude “gels” with the overall company’s culture without affecting his individuality, Asian Paints has  a training program for a year whereby every trainee starts off at the lowest level in the function he is assigned to. For example, a sales management trainee starts off as a salesman in one territory where he is an under study to the regular sales officer. He travels by the same conveyance and eats the same food and stays at the same hotel as the sales officer. This as is generally meant to “grinds all inflated egos to the ground” and generates an attitude to help others and understand the real “market”. Later on when the trainee manages the sales teams, he knows their issues and problems and is able to take effective decisions without any “false” attitude. Anybody who does not make the “cut” is clearly reassigned or eased out after the first round of promotions. This has created a culture of friendliness, apolitical approach that has made Asian Paints what it is today. 

Written by Srinivas M (ms@mastermentors.in) with inputs from Vembu Shivkumar

 (shivkumar@mastermentor.in) .

STRETCH & RAISE THE BAR- PUSHING PERFORMANCE LIMITS

This world wouldn't be what we are today and what we will be tomorrow, but for the excellence of brilliant individuals, scientists, business persons, politicians, organizations who continuously perform at their 100% level, stretch themselves to give their best every time and continuously raise the bar to deliver better and better...    Master Mentors Advisory

Successful organizations are continuously pushing the barriers of performance. Intel coming out with faster chips, Apple Inc coming out with a newer version of iPhone every time, Microsoft coming with a better and cheaper version of Windows and the rapidly falling prices of every expanding memory chips  are a very few of the  examples we see and experience in our every day life, that is symbolic of Great Organizations.

Stretching the Limits and Raising the bar every time is woven into the fabric of thriving organizations.

While ordinary organizations wait for emergency and respond to extremely challenging situations as a fire fighting measure to stretch the performance of their systems and people, vibrant and thriving organizations challenge their human resources to continuously go for and deliver excellence. This leads not only to operational excellence, but also results in the organization remaining competitive and profitable  like Apple Inc, Microsoft, Google that have emerged stronger during extreme recessions, while those who continued to burn money and resources at the same pace or were not prepared, perished.


Stretching the performance in organizations starts by setting SMART goals.
Normally - SMART is read as Specific, Measurable, Achievable, Realistic and Time-bound, in thriving organizations it is read as  SPECIFIC , ACHIEVABLE, AMBITIOUS, REALISTIC & TIME-BOUND.
The idea is to challenge the status-quo and mediocrity and keep the system dynamic and fast paced leading to a high intensity and performance.
The management not only takes extreme care in recruiting the employees with the right attitude and mind set to aim for excellence, but also keeps the system continuously oiled by regular orientation and training programs or re-skilling exercises that will help them to be prepared for the renewed challenges to the organization from its own approaches, competition and external environment.
The management and the team in thriving organization never take the ambitious goals to be unachievable or something that are for paper. The belief that they have in themselves that turns into a 'Self Fulfilling Prophecy' is a hallmark of vibrant and eminently successful teams.

While it is easier to achieve ambitious targets in a benign and high growth environment, in challenging environments and failing demand scenarios, the real calibre of the teams and their companies are truly tested separating the men from the boys.
'When the going gets tough, the tough gets going'. This is truly believed and implemented in thriving organizations.

Margin for error and in-efficiency is nil or almost negligible in thriving organizations. The quest for execution excellence and a disdain for failure or mediocrity leads the teams and individuals to success and enables them to surpass the ambitious goals set.

Once the goals are reached, the time comes for raising the bar to continue the path of excellence.
Successful organizations realize that the benchmark for success is a dynamic parameter. What is ambitious today may become a mediocre in the near future. Hence, unless we continuously improve and raise the bar every time we achieve the set goals, it is possible to start falling behind the competition and fail to survive.


This is truly one of the key secrets behind the gaining  momentum and repeated delivery of excellent performance at thriving organizations.

PARANOIA+PASSION+POINTS OF INFLECTION = DISRUPTIVE GROWTH

                   ORGANIZATIONS SOAR WHEN THEY FIND THEIR STRIDE

                                                                  Lead to 

Successful organizations discover their fortune through perseverance, paranoia & passion, leading to continuous innovation, execution excellence. They consistently stay ahead of their competition by riding the points of inflection..

There is a fortune waiting behind the door for every organization   borne with a purpose in mind                   

                                                              

Organizations have to strive to find the right key to the door to their fortune of their life time.. Master Mentors..

Look around and we find thousands of organizations struggling to survive as they are unable to make profit despite investing lot of resources and toiling hard. They are termed as ‘Busy Fools’ who work hard only to make losses or at best, no money. They are unable to serve the stakeholders, employees and the society. On the other hand, we come across incredibly successful organizations that have hit the sweet spots in their business, again and again, leading to consistent growth and prosperity.

"Only the Paranoid Survive", quoted Andrew S. Grove, one of the Intel's founders and a legendary CEO.Intel is one of the most successful and ever growing companies of our times, which rode the points of inflection consistently in its growth curve, continuously reinventing itself, to be in tune with the customers’ needs and leading the industry standards with more and more powerful processors.

In his book ‘Only the Paranoid Survive’, Andrew Grove discussed the concept of ‘Strategic Inflexion Point’ . “An inflection point occurs where the old strategic picture dissolves and gives way to the new“, he said. 

   

"There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment, and you start to decline."   Andy Grove, Intel CEO.

While it is never easy to find this inflection point and most of the companies are often blind sighted by this, the best companies are forever paranoid and are continuously innovating to keep themselves  ahead of the curve.


Some of the companies that dominated the world by riding the waves created by the inflection points through innovation, determination and passion in the recent history are:

Google-  With its Search related products and services to capitalize on the rising  need for 'Information services’,

Apple – With  iPod, iPhone and the iPad to capture the mobile consumers,

Dell- Customized products to cater to the value for money conscious empowered customers,

RIM- Black Berry phones for mobile enterprise customers,

Amazon – E-commerce and Cloud computing platform  to capture the sweeping changes in the service oriented architecture space,

FaceBook, Linkedin and Twitter-  Social media platforms to enable today’s generation to express themselves,  leverage their social networks,  stay connected , share and validate experiences,

Nokia – Telecom revolution with value for money feature ridden handsets for brand conscious consumers,

Samsung- With feature rich experience phones with multimedia experience etc.

It is important to note that some of the companies are unable to keep in tune with the fast changing market landscapes and are falling by the wayside losing their market share quickly.

Nokia, Motorola, RIM, Myspace, Orkut face trying situations to keep up their market shares as they miss the inflection points again and again.

          

While Nokia led the mobile market in its early stages and RIM made big headway in the application space, both of them are seen to be missing the bus in the era of  ‘experience’ while Apple and Samsung are leading the pack. 
Apple and Samsung have been continuously unleashing cutting edge innovation to keep in tune with the multiple points of inflection occurring at smaller and smaller intervals.

Organizations which are driven by passionate promoters, filled with employees who passionately lead the organization through the many curves of growth, take advantage of the points of inflection as they keep occurring. Such organizations are filled with competent professionals with positive attitude, purposefully and passionately driven towards a common vision with high motivation, leading to exceptional results consistently.

Apple Inc, Google, Microsoft, Dell, General Electric, Facebook are some such companies in the living history led by great promoters who have demonstrated an organization wide Paranoia along with Passion, infectious across the organizations which enabled them to conquer the Points of Inflection and take their organizations through phases of disruptive growth. 
Companies like Polaroid, Xerox, Sega, Myspace, Orkut, Hindustan Motors, Kodak, Sony, Motorola are some of the numerous companies that have either lost their edge or got the soil under their feet completely washed off due to the tsunami caused by the points of inflection that occurred due to changing market places or disruptive innovations.

While there are Pots of Gold existing for thriving companies to  explore and exploit, it is imperative for the successful companies to innovate and persistently try to find the keys to unlock the doors to their fortune.

THRIVING IN THE FACE OF COMPETITION..

Competition is the keen cutting edge of business, always shaving away at costs. Henry Ford

                         

Competition is considered as a compelling reason for organizations to continuously reinvent themselves and be on their toes. While competition is considered as a threat to their existence by most of the companies, the really successful organizations view it as a challenge an opportunity that drives them to continuously innovate, reinvent themselves, improve and grow over time

Emergence of new Competition for any product or service could be seen as an endorsement of the attractiveness of the market and an opportunity to grow the demand by investing together to educate the customers and offer better and better features.

By staying competitive and through constructive approach, smart organizations try to garner higher and higher share of the market.

In India, Hero Honda started offering a range of 100cc Bikes in 1985, the two wheeler market was largely dominated by Bajaj Auto with its traditional scooters. As the market for the 100cc bikes, which happened to be a disruptive innovation at that time, with a far superior mileage to the existing competition,  Bajaj took  little time in responding to the challenge.

In 1986, Bajaj Auto launched a range of motorcycles and fought fiercely with the fast emerging blue chip company, Hero Honda Ltd.. While a number of other companies who got into the two wheeler market perished along the way, Bajaj Auto managed to survive the competition and grew to an annual revenue of over US$3.5 Billion as seen today.

Over the last decade, the company has successfully changed its image from a scooter manufacturer to a two-wheeler manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Its real growth in numbers has come in the last four years after successful introduction of a few models in the motorcycle segment

Together, Bajaj, TVS Motor and Hero Motors (formerly Hero Honda) have grown the Indian market for 100cc Bikes to over US$10 Billion in the past 28 years from almost nil levels.

Fierce competitive spirit in the market place leads to continuous improvement of the features and improved value for money for the consumer due to the efforts of the organizations to be the preferred vendor.

Rise of Bharti Airtel as a global organisation despite being faced with disruptive price competition from Reliance communication during the past 10 years is another classic example of a great organization .

While a number of organizations have perished being unable to cope up with the competition, the successful companies display the following traits:

A)     Monitoring competition- Continuously study the competition and strive to keep ahead of them with distinctive and unique selling propositions. Look for opportunities to learn and replicate/surpass in the good features and avoid mistakes done by the competition. Monitoring the competition will allow the company to study the response of others to similar environment and hence will help in evolving the right response.

Various online and offline sources like websites, news reports, annual reports, report by funds, advertisements for products and people, patent applications, market surveys are used to monitor the competition. Schemes, New product launches , Pricing movements  Production reports, Demand and Inventory reports are continuously  monitored by the market intelligence wings in successful organizations.

.

B)      Watch out & Respond to New developments- Look for disruptive innovations or competition from alternate product/service- markets that could evolve as an opportunity to compete it in or as potential competitors. A number of times most dangerous competition stems from new companies that have worked in stealth mode. Successful companies use brute force to dominate such market, stifle growth of such companies or sometimes buy out the competition.

For example, Nirma was a classic example in the Indian scenario which as a new entrant into the detergent market gave tough time to the market leader with disruptive innovation in product/pricing/packaging w.r.t  Hindustan lever’s Surf.

Very often innovation in the form institutional disruption and country disruptions seep the companies off their feet if the threats are not proactively handled.

C)      Co-exisiting with competitor as Partners –

Constructive approach to competition has helped companies evolve new markets together with joint investments in setting uniform standards necessary for productive use of resources, share  capital resources required for product development, distribution etc while making operations more profitable and viable leading to a higher net addition of economic value.
Apple Computer's decision to use Intel's processors and also 'Windows Operating System' in a dual mode in its personal computers in 2004-2005 lead to a dramatic growth in the sale of its PCs and gave a new growth curve to its business.

Mark Cataldo, Chairman of the Board of the Open Mobile Alliance, a network of leading telecom companies in the world announced "The Open Mobile Alliance is very pleased that our organisations have come together to address this key technology area. By cooperating, our organisations, OMA's service enablers and APIs will enrich the support of multimedia services across the rapidly diversifying range of devices."

http://news.yahoo.com/major-standards-organisations-cooperate-drive-development-home-environment-125007624.html

This is a great example of the cooperation among competitors to evolve industry standards. Similarly, the cooperation between the Indian cellular companies to hare cell tower infrastructure by forming joint venture companies is another classic example of co-opetition (cooperation between competitors). Formation of CIBIL by financial services companies in India is another classic case of competitors coming together to share information to help in credit rating verification of their applicants to reduce delinquancies and Non Performing Assets, thus improving their performance.

Today’s successful companies have a clear constructive approach that enables them to leverage competiton for business growth than be intimidated by them and be insecure. This is the hallmark of thriving organisations.