Sunday, February 8, 2009

The Art of the Start - A Summary

I recently read the book "The Art of the Start" by Guy Kawasaki and as a wannabe entrepreneur I really enjoyed reading this book and found some nuggets of wisdom that I want to remember and apply in future. Below is a summary of what resonated most strongly with me:
  • Find a reason to do business – a reason bigger than making money. Create something that does some good, something helps people. Working for a cause makes what you do meaningful and keeps you going through the tough times. An example would be – “helping people save money”.

  • Think of a catch line or a mantra defining the product/service/company that people will easily remember and associate with the company. For instance, Nike’s mantra is – “Authentic Athletic Performance”.
  • Start creating and delivering the product/service instead of waiting to perfect it. There is no better way of learning than getting your feet wet.
  • Decide on your business model or how the business will make money. Keep it simple. Test it for sustainability – determine why people would want to keep paying for the product/service.
  • Take project plan approach in execution. At the simplest level, compile major milestones and steps that will lead to them. This will introduce discipline in execution and ensure that things get done.
  • Position the offering - make it personal. For example - this product “reduces air pollution” vs. “prevents you from having lung problems”. The latter is more personal. Keep it customer centric – focus on what your offering does for the customer.
  • In early days of the business, manage cash flow, not profitability because it is cash that will keep the business afloat. Good cash flow essentially means – short sales cycles and recurring revenue.
  • Focus on function not form in each and every part of the organization from the offering to operations. Adopt a frugal approach – under-staff and outsource. It is better to have too much work and not enough people as opposed to the other way round.
  • Build a board of people who can act as trusted advisers to your business.
  • Recruit evangelists. These are typically people who like the product or service and are happy to help spread the word. Ask them for help. Equip them with the right tools and make it easy for them to spread the word.
  • Foster a community focused on the product/service.
  • Ensure that a business plan addresses the following:
    - Problem
    - Solution
    - Business model
    - Unique Selling Proposition or the magic formula
    - Marketing and sales
    - Competition
    - Management team
    - Financial projections and key metrics

See Guy Kawasaki's presentation on "The Art of the Start" below:



Click here for Guy Kawasaki's website.

Thursday, January 22, 2009

Netbooks: The present and the future

A little over a year ago, a relatively little known laptop manufacturer called Asus launched the first ultra-portable laptop or the netbook. The market for these netbooks has exploded since then. Several manufacturers around the world now offer products in this computer category (Click here for an interesting news and information web site covering netbooks )

Interestingly, the term 'netbook' was trademarked by a company called Psion that had launched its mini-laptops several years ago. The product was discontinued, but the term was reintroduced by Intel in 2008.

The idea behind netbooks is to provide a very small and light weight, low capability and cheap device that allows users to do simple activities such as checking emails, surfing the web, listening to music etc. However, as as features and processing power of netbooks continue to evolve over time, the line between a netbook and a notebook will get blurred. This leads us to an interesting question - Will netbooks replace laptops completely at some point? Well, if we were to look at the desktop versus laptop example, we have seen that desktops have continued to persist inspite of the rising popularity of laptops and their ability to match or even exceed in certain cases, the features offered by desktops. So, for netbooks to compete with regular laptops, they have to provide the complete features set and processing capabilities of a regular laptop, yet maintaining a low price tag. Even so, netbooks still have restrictions such as small sized screen and keyboard. However, as features and processing power of netbooks continue to evolve, it is possible that that the netbook/notebook market polarizes into small sized laptops similar to netbooks and notebooks similar in appearance to Apple's Macbook Air, providing users the choice between a small ultra-portable device and a large yet light-weight full-screen and full-keyboard device.

There has also been a trend towards providing netbooks with cellphone like contract deals, where the netbook will be sold at a hugely discounted price in return for a lock-in period for using the telecom provider's wireless data services. However, this business model is still in experimental stages and it is yet to be determined whether netbooks will sell more like laptops or more like cellphones.

As of now, the future of netbooks looks bright with the netbook market buzzing with activity and manufacturers rushing to unveil new netbook models with added features. (Click here for a listing of new netbook announcements in Consumer Electronics Show 2009)

However, in the distant future, some disruptive innovation may lead to a smartphone kind of a single device that replaces all kinds of computers including netbooks! Until then, netbooks rock!!

Thursday, September 4, 2008

Colleen Barrett: Sharing the “Luv”

I recently had the opportunity to hear Ms. Colleen Barrett, President Emeritus of Southwest Airlines, speak at an event organized by Dallas Business Club.

Ms. Barrett has been with Southwest since its early years, starting as a corporate secretary in 1978 and rising through the ranks to become the President and Chief Operating Officer. She is known for her remarkable leadership, her instrumental role in hiring the right talent for Southwest and defining the Southwest culture. A strong advocate of the “Golden Rule”, Ms. Barrett embodies the Southwest values and is described by some as the “heart of southwest”.

Ms. Barrett talked about her journey at Southwest, her beliefs and the Southwest culture. She engaged the audience, shared some interesting stories while giving valuable lessons in strategy and leadership. Here are my key takeaways from her session:

Customer service: “We tell job applicants we're in the customer service business. We just happen to provide airline transportation" – echoed Ms. Barrett’s belief in customer service being at the core of Southwest’s strategy. Southwest has been consistently ranked #1 in customer service. With the turmoil and uncertainty in the airlines business, most airlines seem to skimp on customer service. But Southwest’s commitment to a pleasant air travel experience helps it differentiate itself.

Employee empowerment: Ms. Barrett talked about empowering the employees to make the right decisions to serve the customers best. She stressed that while there should be policies and rules in place, yet she believes that the employees should have the freedom to use common sense and do the right thing, which ties into great customer service. Another hugely successful example of employee empowerment is the Four Seasons hotel chain that has become the benchmark in hospitality.

Living the core values every day: There are few companies that practice their core values as well as Southwest does. Ms. Barrett talked about how Southwest seeks the values in prospective candidates and how they reinforce it every day with the employees at all levels in the organization and this is what defines the unique Southwest culture. Southwest encourages employees to have fun and show their personality. Because ultimately, only happy employees can lead to happy customers.

Hiring the right people: Southwest is known to hire people based on their attitude and training them for skill. This not only helps Southwest stay close to its culture but it also helps it keep employees happy and retains them for the longest period of time - Ms. Barrett being one of the greatest examples, having served Southwest for over 30 years! Southwest has among the lowest turnover in the airline industry and this translates into lower costs.

Being "good value" versus "cheap": When someone asked Ms. Barrett about how Southwest differentiates itself from other low fare airlines, Ms. Barrett said that Southwest is trying to provide good value for money versus being a cheap airline. Southwest does not nickel and dime its customers by charging fees for checking bags and getting beverages and snacks.

The Southwest model has been among the most popular case studies of all times But in the face of stiff competition both from a string of airlines trying to emulate Southwest’s model and other incumbents, rising fuel costs and weak economy, it would be interesting to see how the new President Gary Kelly and other leaders at Southwest will continue the Southwest legacy of providing affordable air transportation with exemplary customer service, while making money in the process.

Click here for a news article on Colleen Barrett stepping down as Southwest's President
Click here to read Colleen Barrett’s bio
Click here to read Southwest’s blog

Thursday, August 28, 2008

Retail sector in India – far from runaway success

According to a Wall Street Journal article, the Indian retail sector is showing signs indicating that the retail boom is smaller than anticipated. (Read the WSJ article here )

After the Indian government allowed 49% FDI in retail in 2006, India has grabbed the attention of retailers worldwide. Since then many global players such Walmart and Tesco, as well as domestic players such as Reliance, Aditya Birla Group and Future Group have launched their own retail enterprises and several others are in the process of starting operations and establishing strategic alliances.

However, the road to success in the retail sector in India is still fraught with many challenges. To illustrate, the capital city and my hometown Delhi saw a huge surge in construction of malls and shopping complexes for the oncoming retail boom. There are several new malls in areas previously unoccupied and several under construction. The real estate prices have continued to go up making it more and more expensive for retailers to rent or buy outlets. But most of the newly sprouted retail outlets are struggling to break even. Competition has increased manifold and buyers are still fairly cost-conscious.

There is still a lack of infrastructure in the country. As an example, Delhi has the highest road density in the country and a huge network of highways and newly constructed roads, yet it presents significant ground transportation challenges for retailers such as Wal-Mart that will need to transport materials using huge trucks.

There are several supply chain issues in India. According to an interview by Raj Jain, Wal-Mart’s India President, lack of organized supply chain is among Wal-Mart’s biggest challenges. There are several inefficiencies that contribute to higher costs and prevent the retailers from gaining significant cost advantages.
(Read the Raj Jain’s interview here )

If the number of players in retail keeps on rising without a clear strategy or expansion plans, there is bound to be a string of failures, as the Wall Street Journal article pointed out.

In the midst of these challenges there are some great success stories such as Future Group’s Big Bazar that has become a household brand and continues its expansion across India. I still believe that this $ 350 billion industry has significant opportunities but tapping this huge potential will require deep pockets and ability to survive a few failures and losses, strong understanding of consumer needs and preferences, and ability to develop efficient supply chain systems that deliver cost savings. Like many others, I will be watching with interest to see how the story unfolds…

(Click here for an interesting blog on developments in the Indian retail sector)

Thursday, August 21, 2008

Lessons from managing an offshore team

Offshoring has continued to be one of the most important ways through which companies reduce their costs. As per a report by Plunkett Research, outsourcing will become a $500 billion industry in 2008 (See the report on outsourcing trends here )

Establishing offshore operations is just one part of the equation. Successfully managing offshore operations becomes crucial after the inital setup is complete. Managing an offshore team presents its unique challenges. Below are some lessons I have learned from my experience:

Communicate effectively and excessively: When it comes to working in an onsite/offshore model, communication between onsite team and offshore team becomes more challenging and more important at the same time. The absence of face time makes it harder to build relationships and constantly be on the same page. Therefore, communicating using all channels such as conference calls, web based tools, emails, etc., reinforcing the important details, and communicating frequently works much better than just sending a customary email update.

Establish processes early on: The larger the offshore team grows, the more important it becomes to have procedures in place. Good coordination between the onsite and offshore teams is critical for smooth operations. Lack of processes can cause a lot confusion and wasted effort. Therefore, it is important to clearly establish the way things will work, who will own what and what to do in case a process breaks.

Keep the team motivated: Calls at odd hours, long working hours, and cultural differences are some of the challenges that offshore teams constantly face. If not managed carefully, they can lead to low morale, reduced productivity and even attrition. Recognizing the team and individual members, celebrating achievements, actively working to resolve issues, and communicating openly are some of the ways that are effective in keeping the team motivated.

Train the team well: While many teams are advocates of on-the-job training and learning by doing, in an offshore team, there is no substitute for training people upfront. An untrained team may make mistakes that get amplified because of being on the other side of the world, and prove to be very expensive. Pacifying an angry customer and doing all the damage control later may just not be worth the time, effort and costs. Mistakes will happen but sound training can definitely help eliminate some of them.

Always have a contingency plan: No matter how well planned things are, something will go wrong at some point. System outages, server crashes, data issues and other unforeseen events can cause disruption to work. Therefore, it is important to have a contingency plan in place to manage such events and minimize the damage. This is particularly important for an offshore team because when things go wrong during regular business hours, there is no way to warn the onsite counterparts because of the time difference.

In conclusion, managing an offshore team well can make all the difference between a successful and a failed offshore engagement.

Thursday, August 14, 2008

Best Buy to start selling Apple's new iPhone3G

Best Buy announced yesterday that it will be carrying Apple’s new 3G iPhone. This makes Best Buy the only retailer apart from Apple and AT&T stores to sell the iPhone3G and that too at the same price point (Read the news article here )

Earlier this month, Best Buy had completed its nationwide rollout of Best Buy Mobile, a store-in-store concept along with standalone stores offering a more positive phone buying experience for the customers (Read the press release here)

For Best Buy, this is a great business move! Best Buy has been able to leverage its long standing relationship with Apple to now sell one of its most popular products. There can’t be a better way to capture the smart phone market than to start offering Apple’s iPhone3G early on. The Best Buy Mobile concept, if successful, will significantly increase Best Buy’s higher end phone sales.

For customers, this presents another (and probably better) option to buy the 3G iPhone. This will also give them the chance to compare iPhone to other smart phones such as Samsung Instinct and LG Dare. Besides, the shoppers will appreciate not having to wait in long lines outside Apple and AT&T stores.

With the growing smart phone market, if Best Buy does it right with a combination of good customer service and positive in-store shopping experience, this could be a winner!

Wednesday, August 13, 2008

What Olympics mean for China

The 2008 Beijing Olympics are not just a sports event for China. Winning the bid for 2008 Olympics was a landmark event for China and China left no stone unturned in its preparation for the Olympics. With a spending of over $40 billion, Beijing Olympics are officially the most expensive games in the history of sports. Apart from being a symbolic victory for China, the Olympics have affected and will affect many other facets of China.

Political implications:
China’s ruling communist party has been surrounded by controversies around its policies on issues such as human rights, religious intolerance, censorship and treatment of Tibet protests. The Olympics torch relay was marred by protests in Europe and the US as activists saw Olympics as a stage to show their ire and opposition towards the regime. While some might agree that politics and sports should be kept separate and that allowing China to host Olympics is not necessarily an endorsement of all its policies, yet Olympics have brought the spotlight onto China and opened it to more media scrutiny and further criticism. This will put additional pressure on China to honor its commitment to better human rights record.

Environmental implications:
Beijing’s air pollution level was higher than World Health Organization standards. Olympics prompted Beijing to clean up its environment. Taking cars off the roads and closing factories is a step in the right direction and will help in the short term. But for a developing economy that will keep adding thousands of cars every month, it will be an ongoing challenge to curtail pollution. However, Olympics might cause China to change its energy policies to ensure lasting long term impact.

Tourism:
China drew more than 2 million visitors from around the world during Olympics. But Olympics will give a boost to China’s tourism industry even after the games are over. The host city Beijing transformed in preparation for the Olympics. From 220 mph fastest rail service in world to Olympics venues such as bird’s nest, Beijing promises a lot more even beyond the Olympics.

Business:
Olympics have not only given an opportunity to China to showcase itself and possibly attract more foreign investment in future, but have also presented a huge opportunity to companies around the world to lure the Chinese customer. This will undoubtedly give a boost to the Chinese economy. The question is – will China make billions more after the Olympics than it spent before the Olympics?

Saturday, August 9, 2008

A la carte pricing in airlines - pillows and blankets on the menu now

In yet another move by airlines in the face of rising fuel costs, Jetblue has announced that it will be charging $ 7 for a pillow and blanket: http://www.nytimes.com/2008/08/05/business/05pillow.html

As airlines try to come up with creative ways to charge travelers money, it seems that travelers will now have to shell out money at every step of their journey – from paying more for booking fees to checking bags to getting drinks on the plane!

For airlines grappling with rising costs, this might help generate some additional revenue, but at the cost of inconvenience for the travelers. This will not only make the headline fare seem much lower than what travelers will actually end up paying but also force them to take their wallet out every time they want something. This string of additional fees for once-free services will undoubtedly infuriate most passengers.

In the airline industry, where no service can be taken for granted anymore, one can only wonder which “luxury” will be the next one to go away! Or like all things, will this come a full circle back to full service all-inclusive airlines?