On first anniversaries and 30th birthdays...

Today we celebrated Auctus' first birthday - quite a milestone I suppose. As someone who has celebrated his milestone (read 30th) birthday less than a week ago, I can tell you that both days have been uncannily similar.

The follow up to birthdays is always exciting. The mind conjures images of "fundamental changes" that the birthday is supposed to transpire - quite akin to new year resolutions. For weeks I had been planning that in the new year (of my life,) I would wake up an hour earlier everyday, exercise more frequently, be more productive at work, refresh those bits of theory which have gone rusty, be nicer to friends and family and so on. Added to this anticipation of fundamental change are the expectations of how the actual birthday will be celebrated - surprises from the spouse and parents, maybe an indulgence or two capped by a nice meal and maybe an expensive drink that requires a special occasion to be drunk.

The anticlimax begins right at the beginning of the birthday. Somehow, as one wakes up, the day seems ridiculously similar to every other day. The spouse, parents and close friends to their duty - cheerful happy birthdays, a gift-wrapped pack or two and five minute calls where most of the conversation veers around good-natured but not-serious demands for parties and "What else is happening?" Duty done, the spouse goes to work, the parents finish their calls and the friends go back to their daily grinds. It is not long before the anticipatory excitement in one's own mind is taken over by thoughts of decks to be closed, logistics to be tied up and groceries to be bought. The special meal and drink end up being less exciting too - There are only so many restaurants in Whitefield (and by dinner time, I am not excited enough to drive elsewhere) and all the appetizing items on the menu have already been tried and tasted. The anti-climax continues over to the next day - One realizes that one's body clock has scant regard for one's resolutions and prefers to wake up at the accustomed hour (or even later, leveraging the previous night's drink as an excuse.) The "fundamental change" remains as elusive as ever.

Today, Auctus' first birthday, was quite similar. The morning was spent on work and in the afternoon some of us met up, ate some indifferent overpriced buffet food, had a few beers and went home - Indistinguishable from any other "work party" we have ever had in Auctus and our previous companies. The typical "fundamental changes" one expects out of one's company - valuation jumps, streamlined processes, improved work-life balance, better and more entrenched clients etc. did not even cross our minds (if they did, they went unexpressed.)

If you have read this far, I owe you an explanation on why I am sending this mail - It is because I just looked at my head in the mirror. It is not long ago that I could count the grey hairs on my head, but they seem to have multiplied to a point that I can count them no more. I also seem to have resigned to the fact that the bulge in my midriff will not grow back. There will be no more first interview, first job, first client, first salary, first bonus, first presentation, first sell, first promotion, first project to manage, first start-up (first date...) It is not long ago that I lived driven by the ambitious anticipation of these many "firsts." Today I seem to be driven by the conviction that in most situations, I will be able to draw parallels with some similar situation from the past. I guess this is what happens when one grows old - ambition is replaced by conviction; raw and unstable growth potential is replaced by stable foundations for steady growth (of course, till the level of one's incompetence!). Slowly the realization dawns that real growth happens unnoticed while we keep chasing fundamental growth multiples.

It is uncannily similar with Auctus. Today was no different than yesterday. It will hardly be different tomorrow. But it is fundamentally different from where it was a year back. No-one looks upon us as a start-up any more. Other consulting firms seem to have heard of us and our clients. Top notch IIT / IIM folks (and BITS & XL folks :-)) regularly contact us for opportunities. That slide in our pitch document with client logos is getting increasingly crowded. We have entrenched clients who trust us implicitly - and some of them have been cultivated just over the last one year. We are growing our offices (just today we moved from a one-seater to a two-seater in Bangalore) and team. During HR interview rounds, we seem to spend less time introducing the company - candidates seem to know much more than they did a few months ago. The seeming indifference on our first anniversary seems to hide an invigorating truth - The fact that this day will come was a foregone conclusion in all our minds. I suspect our 5th anniversary will be similarly mundane. Our focus will remain on making Auctus Advisors a "fundamentally better company" and we will have little time to celebrate the steady improvements we have made everyday. I fervently hope that is this way.

It is one of those rare occasions when pedestrian truisms actually seem to make some sense - "It is the journey that matters!"

Happy first anniversary to Auctus Advisors!

The good is oft interred with their bones

This blog is not meant to be a personal journal. However, as many would argue, segregation of personal and professional lives is a theoretical construct. In any case, as we often joke in our profession, you can link any cause to any effect with angrezi. So this post is going to be rather personal, though I shall make some lame attempts to link it with my professional life.

 

I am reaching a stage in life where a full generation of relatives, whom the English language describes with the prefix “grand,” is fast dwindling. To put a number to it, only 25% remains in my case. Also, those who remain appear to be spending a lot of their time waiting for something. Another generation, which we have never treated any better than our “source of resources”, is also growing old. Their resources do not seem as unlimited as they used to be in those growing up years. The conscience, which happily ignored the unreasonable demands we made on those resources earlier, is increasingly asking pestilential questions at the prospect of ever having to depend on the same resources.

 

Rationally speaking, there is nothing dramatic about mortality (and taxes.) It is the “awareness of mortality” that seems dramatic. Not only do we go through life oblivious about our own mortality, we also ignore the mortality of those around us. It is only an occasional death in the family (or the departure of an aged relative that makes you question – Will I see her again?) that makes us stop and contemplate this commonplace phenomenon called mortality. This inevitably leads to thoughts of legacy, or rather the question – How will I be remembered?

 

I am increasingly realizing that we have little control over our legacies. We will be remembered the way those after us choose to remember us, and we can do very little to control that. Typically, in the long run, we give those near to us an almost equal number of pleasant and not so pleasant memories to remember us by. So it is up to the survivors to choose the memories which will define us after we are gone.

 

Take my paternal grandfather for example. He was loud, some may say he was insensitive, ate rather messily and had an uncanny ability to destroy any gadget beyond repair within three days of purchase. He was also a doctor, but that rarely seemed to intrude into my relationship with him. My relationship with him was often characterized by profound embarrassment. Take for example the time I was twelve and we were on a crowded train, about to enter the New Delhi station. I wanted to go to the toilet, but all of them were being used, so I came back to my seat (presumably with dejection written all over my face.) It was at that moment that my grandfather chose to offer a judicious solution to my predicament, in his habitual loud voice that reverberated through the coach – “All the toilets closed eh? Just open the coach door and do it, will you?” True incident, not kidding! I almost invariably recall this incidence when I talk about him.

 

But there are two other incidents which are etched in my mind. One was when I was even younger. I was tying my keds (there were no “sneakers” in India then,) and he was sitting on a chair in front of me, clad in his usual dhoti and sweating profusely in the Calcutta summer. Suddenly he asked me – “Are you all right?” I looked up and saw him slightly different from his usual self. His head was slightly craned forward, his jaws were tighter than usual and he was looking closely at me (with eyes which had begun losing their vision by then.) “Of course I am, don’t bug me,” I said and ran out. I came back a couple of hours later, feeling uneasy and soon I was in bed, with pus filled boils all over (just chicken pox, nothing more dramatic.) I remember my grandfather checking the boils and nodding, a hint of a smile on his face.

 

I still don’t remember my grandfather as a doctor. But many years later, I was told that the mark of a good professional is what is called “incisiveness” – an ability to spot a problem before it surfaces.

 

The other incident that I remember happened three days before my grandfather died. He died of a wound he received in a freak accident. My grandmother pulled him by his arm to protect him from being run over by a truck. His brittle skin broke where my grandmother had pulled him. I remember him the next day, touching his wound gingerly (almost lovingly) and muttering to himself – “Looks like this is developing into cellulitis, hm, not good.” He then went back to the newspaper he was reading. Three days later he was dead, his right arm having practically rotted.

 

I still don’t remember my grandfather as a doctor. But I hear that objective analysis is the mark of a true professional.

 

Let’s move to my maternal grandfather now. The list of the evils that he has done can be very long. He inherited a thriving business from his father which he ruined, too arrogant and pleasure seeking to survive the competition. He left my grandmother with practically nothing. He spent the last three years of his life on bed. I don’t think he suffered as much as he made my grandmother suffer in this period.

 

But there is a memory I have of him that sets him apart. It involves him cooking. It was two fifteen in the afternoon in a household that typically ate lunch at one. Tempers were running high (as they tend to do when stomachs are empty) but my grandfather labored on, ignoring all our protests. The water had to be perfectly heated, the spices had to be mixed in perfect proportion, each side of each piece of meat had to be perfectly cooked and you don’t do that on high flame. Time was not important.

 

We finally ate at three. No one actually complimented him, but the hushed silence over platefuls of rice and mutton curry was loud enough. They say taking pride in one’s work is the mark of a true professional.

Finally, a memory that I have recently acquired, which sparked this post. It is about a recently acquired relative – my wife’s grandmother. We don’t speak the same language and communicate mostly through elaborate gestures. A conservative Tamil Brahmin, I don’t think she ever thought she will have me as a maplai. But over the one week she is staying with us, she is up at five to bathe and cook me breakfast and brew me filter coffee.

Last night I saw her sitting on the sofa, hunched over herself, with the newspaper held close to her eyes. She was doing the Sudoku. I checked today – it was of the hard variety and she had almost finished it. There is something sublime about an old woman who has spent most of her life cooking and rearing her children, speaking nothing but her own language, confined to the region of the world she was born to and her family, doing a mathematical puzzle devised by a Japanese published in an English newspaper in the house of her Bengali grandson-in-law, in a city she has never stayed in before. I know this is the memory I will remember her by.

 

The evil that men do lives after them; the good is oft interred with their bones. But I guess it is a choice we all owe to those before us.

Why some systems work and some don’t

The idea for this post emerged from two recent incidents. Let me start by narrating those.

I was travelling with a senior colleague recently. He is a Canadian of Indian origin and has been back in India for about five years now. He had to collect a print out of his ticket at the airline counter. He politely stood in line and waited his turn and as expected, there was a white kurta clad politician type who tried to elbow his way in front of him. My colleague yelled. The kurta clad politician type stepped aside for a moment. Then as my colleague was about to give his PNR at the counter, our man tried again. The only thing which would prevent our offender from trying to break the line seemed to be a cattle prod.

 

Later on, I asked my colleague about the major challenges he had to cope with after returning. He said that he always finds it difficult to cope with how insensitive we Indians are about our fellow citizens.

 

The other incident again happened inside a plane. By the number of calls Indian fliers tend to make before they are officially allowed to use their mobile phones inside the plane makes me wonder whether India is a country of a billion CEOs or better, rescue professionals. There is no other way people need to make so many life and death calls (or check life and death mails on their blackberries) while the stewardess is crying herself hoarse requesting passengers not to use their phones.

 

Anyway, there was this gaudily dressed businessman type who started yelling into his phone even while the plane was decelerating on the runway. Of course, he was talking to his driver. While the conversation was in Hindi, it may be paraphrased in English as follows: “No, don’t you park the car in the designated parking space, you moron! Just plonk it right at the passenger exit. You will see a big “No Parking” sign. There is usually free space below it. Just park it there and wait!”

 

Which brings us back to the billion dollar question: Why are we the way we are? Why are the British so good at forming queues and why are we so lousy? Why do we break established systems with such impunity? The most quoted answer of course is “We are like that only!” More serious analyses also exist aplenty.

 

To my mind, any system exists for two broad purposes. First, to ensure “order and predictability” in the way a certain activity is performed. To ensure this order and predictability, the system relies on time tested principles such as fairness, equality, concern for fellow beings and non-violence. Most Indians would wax eloquent about how our “rich and ancient cultural heritage” identified and implemented these exalted principles (It’s written in our scriptures, I tell you!) before those western barbarians came down from the trees.

 

The second purpose of a system is to penalize those who err. Even in this, order and predictability is necessary. The punishment should be proportional and assured. To be fair, I have noticed that the Bangalore Police has implemented a certain amount of “predictability” in the way they check for drunken driving. They simply put their pickets at the same place for months on end. As a result, drunken drivers are able to accurately “predict” the check points and simply drive around them.

 

While it is not too difficult to design a system based on the above aspects, whether a system works or not, to my mind, depends on how much trust the system can generate. If people do not trust the system, they will not follow it. I think that this lack of trust in the system is at the core of why we Indians are the way we are.

First, systems are designed in such a way that gives the impression that they are meant to be broken. Let me give some examples:

• There was this narrow flyover near my house where there was a sign that indicated the speed limit to be 30 km per hour. Made perfect sense, given that the flyover was narrow and clogged. Then the flyover was widened to six lanes! But the speed limit still remains 30 km / hour! Only cattle carts can now follow the speed limit

• There is this property tax payment center with eight different tables for eight different regions. None of the tables are marked. And there is a sixteen page form to be filled before approaching the table. The only option left for most sane people is to bribe a junior official to fill the form and direct to the right table!

When the “system design” is so ridiculous, most of us feel no qualms about breaking them.

 

Second, system implementation is a disaster. System implementation has two aspects. One is external and enforced implementation, such as by the police. Will I get caught if I break the traffic signal? In most cases, no. Because the policeman will be having a cup of tea by the road side. Even if caught, I can get away with a small bribe.

 

The other is implementation by the members of the system internally. If I stand in line and wait patiently for my turn, will the guy behind me do the same? If you are in an Indian line, then no. So if I choose to stand in line and wait patiently, I am the prize fool and my stupidity should be rightly exploited by the clever ones behind me. Result: I too break the line so that I can get my work done.

 

It’s all a game, as Prof. Raghunathan puts it so well in his game theory based analyses of Indian public behavior in his book: Games Indians Play.

 

I don’t know whether the “Indian system” will ever change. I am not even going to pretend that I care. I employ most of my efforts and resources trying to “insulate” myself from this system and live in my own little comfortable cocoon.

 

But there are important lessons to be noted as far as systems and processes go within a business firm. At the core of the success of a system lies trust. This trust is built only when the management is seen to follow the system as rigorously as it expects the employees to. For example, employees will rarely take performance evaluation deadlines seriously if the management does not stick to promotion or increment announcement deadlines. Employees can be scarcely expected to fill their time and expense reports on time if there is no certainty on when reimbursements would actually be made.

 

Not a great insight, but systems work only when they are well designed, assiduously implemented and glorified through example. To my kind, the last one is most critical in a business environment.

The purpose of consultants (and consequent pitfalls)

I went to business school after just six months of graduating from engineering school. I spent those six months as one of the thousands of faceless “software engineers” in India, writing pretty low-end code. After two years in business school, I joined the “consulting” industry. There was a brief period when the term “consultant” sounded mighty glamourous and I walked around with a swagger, looking down (figuratively, I am too short to do it literally) over the lesser mortals joining FMCG, general management or worse, HR. I was lucky to be from a campus without the plum US I-banking jobs (it was before 2008, you see), because they are the “true Brahmins” and would have looked down on us lowly salaried advisors without “bonus components!”

The first assault on my swagger came from none other than my own father. It was our convocation dinner and parents were invited. My father was approaching retirement then, after more than thirty years of building science museums for the Government of India. The futility of trying to create Nehru’s “modern Indian” by infusing scientific rationality among a population safely cocooned in elaborate superstitions and religious opiates never seemed to hit him. What on earth he would know about the glamourous “private sector” and ultra-glamourous “consulting,” I wondered. I was therefore rather miffed when he and another parent seemed to find the concept of a 24-year old without any experience becoming a consultant rather hilarious.

The second assault came from that painful thing called “reality.” It took just a few months of mind numbing excel sheets, PowerPoint slides and inedible airline meals to replace the swagger with a hunch. Existential musings about the purpose of life, universe and everything was replaced with the more specific question around why “consultants exist,” or rather, why do clients, who are perfectly capable themselves, hire consultants (especially those kids in their twenties with a couple of decades’ less experience than the average in-house middle manager?)

In my limited experience, I have come across the following reasons as to why clients hire consultants:

• To fill a genuine capability gap: Occasionally, consultants are called in to fill a genuine capability gap in the client’s organization. Typically, the client is faced with an important challenge which she is unable to solve internally and realizes that she needs the “specialist skills” of a consultant. Being called in for this reason is a major ego boost for most consultants. In fact, I know a number of consultants who believe that this is the only reason why clients call in consultants (which is rather self-delusional, but consultants are human too right?)
• As a stop gap measure: This is similar to the above in as much that the client perceives a genuine capability gap in her organization which needs to be filled by outsiders. But her strategy is to bring in consultants to develop internal capability. Such engagements are ironic, as the consultant is charged with training client resources to deliver his own redundancy (and occasionally proving it too!)
• To augment bandwidth: Basically glorified “body shopping.” The client often faces the need for relatively high quality people within short notice but does not see the justification of creating the expertise permanently in-house. So she literally outsources to consultants. This comes with the added advantage that the “consultants” can be driven far more than employees since the consultants have to justify their “premium.”
• For validation: Ever so often, the client will need “external validation and benchmarking” of her own ideas and strategies by “reputed external consultants.” Put bluntly, she needs a rubber stamp, albeit a high quality branded rubber stamp. The basic assumption here is that the reputed external consultant will be unbiased by the prospects of future work from the same client and deliver a neutral verdict. The validity of this assumption is anybody’s guess, but this reason tickles the consultant’s ego too, often as much as the first reason

Now, if these are the reasons, what must a consultant offer to fit the bill? To my mind, there are two clear propositions:

• Differentiated high-quality people: This is fundamental to all the four reasons mentioned above. The consultant must be able to deliver, and visibly appear to deliver, better capabilities and results than the client’s own employees. This is critical to justify the consulting premium. Moreover, there is nothing worse than the client’s employees feeling that they could have done as good a job at a fraction of the cost for the prospects of repeat work of the consulting firm. This fact is a major ego boost for consultants and often forms an integral part of their identities (there is no better delusion than the illusion of self-grandeur!)
• Differentiated Intellectual Property: The consulting firm must have differentiated intellectual property which cannot be procured from the market. It is fundamental to demonstrate the results from this differentiated intellectual property to the client. Or else, he will simply try to recruit the “high-quality” people (even if it costs a bit more than regular employees) and save on the consulting premium.

Both of these factors add up to the consulting firm’s brand. At the end of the day, it is the monetization of this brand that determines the consulting firm’s bottom-line.

And herein lies one of the most obvious (though often unacknowledged) pitfalls of the consulting industry. The “people” (rather their billable hours) are what drives the consulting firm’s P&L. The IP is a part of the balance sheet. As is often the case in all businesses, disproportionate focus on the P&L leads to neglect of the balance sheet. It takes time, effort (and an appetite for risk) to dedicate resources to develop IP. It implies sacrifice of “billable hours” and a hit on the bottom-line. No wonder then that many consulting firms focus on maximizing the billable hours of their people rather than building differentiated IP.

The unfortunate result is that very soon, clients see just the “people” and fail to perceive what value the “firm” adds. This leads to questions regarding the “consulting premium” which can have three results, none of which are positive from the consulting firm’s perspective:

• The client tries to directly hire the consulting firm’s people, or people of similar profiles
• The client gravitates towards the consultant with the “lowest cost” per man-hour
• The client terminates the consultant and replaces with her own “internal team

Result: this converts a high end consulting firm into a glorified “body shop.”

I am like that only...

Experience is a compelling teacher. It is also a tough teacher – It administers the test before explaining the lesson. As with lessons learnt from compelling and tough teachers, we tend to remember what experience teaches us (at least more than what we remember from books.)

Most of us also tend to trust the lessons we learn through experience. You may tell a child not to touch the fire a hundred times and she may still touch it. Once she touches it, she will never do it again.

I believe that successful people learn more from their experiences. In most professional services, a strong technical background from a reputed institution is often a prerequisite. Therefore, from a purely technical perspective, there may be little to distinguish between a successful and unsuccessful professional. What distinguishes a successful professional is her ability to learn more on the job (another term for experience) and leverage those lessons to beat the competition. Successful senior managers usually have a large arsenal of challenging past experiences, from which they draw courage, inspiration and sustenance, apart from the confidence required to address new challenges (and become yet more successful.)

Now there lies a critical human resource and leadership development challenge. Let me quote two instances that I remember from last year. In both instances, a junior manager had complained about his senior manager’s behavior to the competent authorities. In both cases, the senior leader was found to be bullying and intimidating, bordering on being abusive. When confronted, this is what both said (paraphrased, of course):

• You are welcome to complain, but that’s how I work…

• I will try to change, but being aggressive is in my DNA…

While it is tempting to judge (and maybe predict the imminent decline of) the two senior managers, it may be worthwhile to take a step back. Here we are, with two successful professionals, who have risen to senior positions based on their past successes. Their experience has clearly taught them what works and what doesn’t (which is usually a rather subjective matter, but human beings are prone to generalizations.) In the process, they have come to trust their “way of working” and “DNA” as the means (and often the only means) to success.

It is therefore natural that successful and senior people will be highly reluctant towards feedback that requires them to change the way they work, especially if the feedback is from their peers or juniors. This attitude of “I know how it’s done” resulting in a resistance to learn becomes a critical barrier for sustained leadership development.

It is amazing to note the number of middle to senior level managers who believe that there is little or nothing left for them to learn. Offer some feedback, and you will be entertained (or bored) by epic war stories from their past, which invariably make them look like gladiatorial heroes.

I suppose an affective antidote to this is to remember that we all get promoted to our level of incompetence. Fearing this imminent incompetence barrier may be a motivation to keep looking forward, rather than past “spikes.”

First Time Right

A few years back, I was working with a client in the automotive industry. We were discussing about the quality of auto components from Low Cost Countries (sometimes euphemistically referred to as Leading Competitive Countries). That was the first time I heard the phrase “First Time Right” (FTR) with relation to quality. Simply put, this concept implies that the cost of the end-product can be substantially reduced in some cases if the amount of re-work is minimized. This in-turn implies significant upfront effort and planning (and sometimes investment) so that the end product is produced consistently without the need for re-work.

Yesterday, as I was re-arranging some folders in my computer, I noticed a presentation that had “Version 27” as the suffix. This was not a one off case. Almost all documents in my computer have multiple versions and I suspect that the average number of versions for important documents will be in the range of 6 to 10. And I know for certain that almost all my colleagues in the consulting industry suffer from the same affliction (or virtue, if you are the serious sort of fellow…)

This got me thinking – does the concept of First Time Right work in the consulting industry? Is it worth investing time and effort up-front to minimize the version number of the final deliverable? Or is it natural that a document improves through incremental feedback and updates till all involved (especially the client) is comfortable with it? I do not have a clear opinion on this – just a few observations.

In my experience, I have worked with two types of people. Type 1 – those who know exactly what they want from the start – and type 2 – those who are not very clear up front but know when they have hit the right version. Both these types differ in the way they handle the process of arriving at the right version. The final version for both types is usually of the same quality and often achieves the same end results. No prizes for guessing that the number of work-in-progress versions will be typically higher for type 2.

Of course, the experience of the people working with these two types may be quite different. Those working with type 2 have to handle significantly more ambiguity and re-work. It is not unusual for Type 2 leaders to give vague feedback such as “I am not getting a feel of this deck,” or “I don’t think the dots are connected” or “I don’t think that this deck demonstrates our level of understanding on this subject.” It is difficult to work around such non-specific feedback and often leads to frustrations (and maybe palpitations!)

But working with Type 2 also has significant advantages. While it may require some getting used to, Type 2 leaders allow significantly more creativity and freedom to innovate compared to Type 1. Type 2 leaders do not have a specific end in mind. They just know how the end is supposed to feel. As a result, they do not restrict their people within a rigidly defined framework. Instead, they expect team members to think independently and constantly innovate and improve till the “ideal” end is achieved. If handled properly, I believe that one’s learning curve is steeper with Type 2 bosses.

In contrast, Type 1 leaders know precisely what they want and issue unambiguous instructions. Working with them is typically easier, since there is limited ambiguity and the challenge is restricted to adhering to instructions. Of course, creativity is limited in such situations, as is the need to innovate, but the job gets done quickly and efficiently – a replica of the FTR concept in manufacturing.

There is clearly no better type. A soldier may prefer Type 1 leaders. A creative executive in the advertising industry may prefer Type 2. I have worked with both types and learnt from both – and been frustrated at times by both.

But the question remains – is the First Time Right concept applicable in the consulting industry?

Strategy means saying no? Yes? Maybe?

In his book Strategy & the Fat Smoker, David Maister says that strategy means saying “no.” In fact, that is the name of an entire chapter. He says that strategy is not just about choosing a target market but about designing an entire organization aligned to the benefits sought by this particular target market. However, as the operation becomes more and more aligned to the needs and expectations of this target market, it becomes increasingly unsuitable for other target markets, with different needs and expectations. Therefore, Maister concludes, strategy is also significantly about deciding whose business must be turned away.


Of course, this is quite similar to the “Focus Strategy” described by Porter – one of his three well-known generic competitive strategies. The other two are the “Differentiation strategy” targeted at a relatively larger (mass) market and the “Cost leadership strategy,” also targeted at the mass market. However, in the service industry, given the average professional profile (highly educated, providing a specialized service, ambitious,) the Focus strategy by and large seems relatively more attractive. I think this is because success in the Focus strategy implies “superior expertise in niche areas,” which typically sounds attractive to this profile of people, and comes with the promise of a “premium.”

However, in my experience (albeit limited) in the service industry, I perceive reality to be quite the opposite. A large number of firms aim to be, as Maister puts it, one-stop-shops for clients – If you need it and are willing to pay for it, we will do it. Maybe not do everything, but definitely provide quite a broad spectrum of services.

Now I feel that this one-stop-shop strategy is not a bad idea, for multiple reasons:

• Cost of selling to an existing client is significantly lower than finding a new client, even if he is seeking a slightly different product or service
  
• Providing new, and multiple, services to a known client may be an efficient way for a firm to learn and evolve. Attempting a new offering to a known client is definitely less risky than trying it in a new and alien environment
  
• Since no one product or service will remain relevant and attractive for too long, even for the same target market, trying out such new offerings is a prudent way to diversify, and thereby ensure sustainability of the firm
  
• Such one-stop-shop diversifications are typically not fundamentally diverse. Such cross-selling usually happens at different segments of the same value chain (e.g. Consulting leading to Technology leading to Outsourcing). Such forward and backward integrations often make prudent sense

More importantly, I feel that in the service business, where sales often happens based on long-term relationships and trust, a client may be willing to trust his trusted advisor in a relatively new area rather than bring in an “expert” and start from scratch. This is especially more likely when the trusted advisor has delivered satisfactorily on multiple, diverse domains in the past. I suppose this is a corollary of the principle that it is cheaper to sell to an existing customer – It is easier (and often cheaper) to buy from an existing vendor.

I think that is why the implicit, though obvious, strategy for many consulting firms seems to be:

• Step 1: Get a project with a new client – by hook or by crook
• Step 2: Bust posterior to deliver on the first assignment – ensure that all key recommendations necessitate more “focused, in-depth and downstream” work. Oh, and do mention the happy coincidence – “We can do all of it…”
• Step 3: Cross-sell, cross-sell, cross-sell
  

Of course, how smooth the path is from step 2 to step 3 depends on how much trust has been built with the client. This “trust,” I strongly believe, is the key differentiator between honest, sincere and dedicated firms and firms that can only “faff.”

Of course, the flip side is that soon the client may start thinking that he may take any ball and throw it in any direction and the consultant will happily run to fetch. Put in a more diplomatic fashion, the consultant may feel that he is “being taken for granted and not appreciated” and eventually, even his “premium” may be questioned.

Anyway, the fact remains that there is this elusive balance between focus and diversification (related diversification, or even strategic diversification, are acceptable corporate phrases, I hear.) There are tons of strategic frameworks available which are supposed to help firms strike this strategic balance. But you know the one I find most interesting?

“Yes, it is crap work. Yes, it is not going to add any value to us or our firm. Yes, we will hate doing it. Yes, it is an insult to our intelligence and capabilities. But hey, it will help us stick on and on with this client, and maybe someday, we will get to cross sell the real stuff to them. If we do not, the wolves just across the fence are waiting – to happily wade through this crap, all the while sniffing the meat!”

And in such situations, what is done about morale, you ask – Get into a pack and howl “We’re the best, we’re the greatest, and we’re the next best thing to baked bread.” And if you hear whisperings on the contrary? Howl louder!

I hope this does not happen to me (at least as prominently as I have expressed it). And I hope it never happens when (and if) I am in charge.

Market your weaknesses!

All organizations, including business enterprises, have their set of weaknesses. Understandably so, since organizations are congregations of people who have come together to achieve a particular objective (getting rich, being one of the popular ones,) and humans have weaknesses.

Before proceeding, one must distinguish between weaknesses and what a firm chooses not to do. A pure-play strategy consultancy may choose not to do implementation. In such a situation, “strategy implementation” cannot be considered as a weakness of the firm (In fact, it may be a competitive differentiator in a positive sense.) Weaknesses are those gaps in the firm’s repertoire which actively hinder the firm from achieving its objectives, stated or implicit. For example, if the strategy consultancy in question does not have robust financial modeling skills, it may be considered as a legitimate weakness.

Please note that in this post, I will use business organizations and individuals in business interchangeably. Basically, I am going to rely on the truism – Organizations are living
organisms (Is there such a truism?)

When an organization has weaknesses that actively impede its achievement of its objectives, it has two choices – change the objective or plug the gap. While the first choice may score higher on creativity (or desperation,) most firms attempt the second when faced with a similar situation. However, that may not be enough. While battling the weakness is important, it is equally or more important to battle the “perception of weakness” among the firm’s target market. In many businesses, especially service businesses, perceptions are often equally (or more) important than the actual product. If customers continue believing that the firm has a particular weakness, even after it has been plugged, the effort goes in vain. However, if customers perceive that the weakness has been plugged, things are most likely to improve (though it may soon be back to square one if only the perception has changed and not the product.)

In my opinion, an effective way to manage this “perception of weakness” problem is to actively market this weakness among target customers. By “market,” I do not mean sell. I mean, making the weakness an integral part of marketing pitches, conversations and collaterals. I mean actively acknowledging the perception of weakness while engaging clients, and refuting it clearly and logically if it is not true or enumerating the steps being taken to plug the gap if is true. I believe that this strategy works for multiple reasons.

Foremost, it builds trust. As any salesman who sells consistently and in a sustained manner will agree, at the core of sales (or business development, if you so prefer) is trust. In both professional and personal relationships, if the choice is between the most capable and the most trustworthy, most of us will go for the most trustworthy. Trust builds the necessary comfort, bonhomie, openness and even friendship between the client and the service provider which capability alone often fails to achieve. More importantly, a serious buyer would have done his homework and will be aware of such perceptions of weakness anyway. Ignoring such obvious perceptions or trying to brush them under the carpet will make the seller appear opaque and bearing hidden agenda and will lead to distrust. Proactively admitting and discussing such perceptions will convince the prospective client that the seller is willing to go “open book” with him.

Second, it shows that the firm is self-aware, and therefore stable and secure. Like self-aware individuals, self-aware firms actively seek out their own weaknesses and plug them and over time, emerge stronger than before. Like deluded individuals, firms which do not spend time on reflection lose stability and reliability, no matter how correct their intentions may be.

Third (though this may appear crafty), by proactively acknowledging and discussing that one (or a few) weakness, one effectively implies that it is strong in all other relevant domains. Imagine a consulting pitch with five competitors battling it out for an account. Suppose the client has articulated six factors which will drive the final selection. Typically, if it is a serious client, the homework would be solid. The client would have internally evaluated each of the five competitors on the six factors already and developed an opinion on the strengths and weaknesses of each. Harping on strengths will not serve any purpose in such a situation – it will either bore the client (if he knows it’s your strength already) or confuse him (if what you are saying contradicts what he has researched.) However, if you pin down what is popularly known as your weakness, you will immediately have his attention (it will resonate with what he has researched) and his trust (since all he was interested in was how you plan to plug that particular weakness anyway.) I strongly believe that the second approach has a stronger chance of success.

Finally, such an approach usually earns full marks for humour, since it is of the self-deprecating kind. Imagine how refreshing it will be for a client to meet a consultant who can laugh at himself, instead of the stuffy, self-important, pedigree B-school types!

I want to end this post by recounting what led me to form this opinion. I work for a small strategy consulting firm which prides itself on hiring only from IITs and IIMs (with the occasional whiz from Harvard or University of Chicago thrown in.) I went to neither IIT nor IIM (I studied in BITS, Pilani and XLRI, Jamshedpur, both of which regularly feature among the top 5-7 universities, though marginally below the IITs and IIMs.) So when I interviewed with and eventually joined my present firm, I had to face quite a few jibes (all good-natured, of course) about not having “made it” to the IITs and IIMs. Over time, I learnt that the best way to deal with these jibes is to convert it into a self-deprecating joke – “Hey guys, I’m the one who didn’t go either to IIM or IIT! Ha ha!” And it worked! Not only did the jibes die down, people started trusting me more and pushing me towards greater face-time with senior clients!

I also started using this self-deprecating brand of humour to introduce my firm to outsiders – “I work for a firm where each employee has an IIT or IIM against his name, except two – One is me (BITS, Pilani and XLRI) and the other gentleman has Harvard against his name!” Almost invariably, this introduction succeeded in conveying how “great” my company is, and by extension, how “great” I am.

Looking back, I think this tactic worked because of the following reasons:

• At the outset, it showed that I studied in two top institutions
• By inverse logic, it hinted that I must have excelled in some way beyond the ordinary. Why else would such an exception be made? (I honestly don’t know why this exception was made though!)
• It shows I am secure – I am fiercely proud of both my alma mater and I met and studied with some of the best people I have met in my life there (including my wife!)
• It showed that I was aware that I would have to stretch that much extra to match up – and such stretching would often lead me to excel
• Finally, that I have a sense of self-deprecatory humour
  

An important lesson for me, in retrospect.

Impact of "Family Bandwidth"

In the last post, I have attempted to establish the importance of "family bandwidth" in family businesses. In this post, my attempt is to discuss various consequences of mismanaging family bandwidth, as I have observed in my career. A caveat - my intention is not to comment on "family capability," at least in this post.

Individuals and families, who set up large and successful enterprises, are almost invariably highly capable, ambitious, industrious, enterprising and often ruthless people. Almost all of them are driven by some form of burning passion and vision - though not necessarily the ones articulated in their corporate websites. Such people are rarely satisfied with what they have - they usually have indomitable urges to grow their businesses (or "empires"), and often as persons. Of course, in the context of business, "growth" is often a prerequisite for survival. Therefore, except in deep recessions (when the focus is on protecting what has been built), the focus of most businesses, and especially family businesses, is on growth.

Consequently, as established in the previous post, the demand on "family bandwidth" rises. And as also discussed in the previous post, family bandwidth is often a major, if not the most critical, bottleneck in the growth of family businesses. Given the challenges in expanding family bandwidth as rapidly as today's highly dynamic business environment demands, "delegation" to "non-family professionals" often emerges as the only option.

And there lies the next challenge. Delegation necessarily demands two things - Trust and the willingness to relinquish control. Both are "tough virtues" among family businesses. I am not passing a value judgment here - "clannishness" is a very natural human (and primate!) quality.

The purpose of this post is not to discuss how this "delicate balance" between growth imperatives and developing trust / relinquishing control may be identified and established. It is to discuss certain consequences that family organizations suffer from when families attempt to deliver ambitious growth without striking this balance of trust and delegation with non-family professionals. Here is a list of what I have observed:

Working at odd hours and round the clock: Now what is wrong with a board meeting at 10 p.m., you may say? Especially in India, such behaviour may be rationalized through multiple reasons:

• The family owns the business and pays the hefty salaries, so they may call their people anytime they want
• The number of hours spent at work determines how "hard" the people are working
• Professionals, especially the highly paid types, cannot "afford" personal time
• How else will mundane professionals (who often compare signing a deal with winning a battle) feel important?
• How else will we have "corporate martyrs"? - The type whose only identity is their work life?
• The pace of growth (of position, pay and girth) in the corporate jungle is determined by how much personal and family time one has "nobly sacrificed" at the altar of their profession - It is a different matter that we Indians insist till hoarse that our social and family values are distinctly superior to the decadent west, while we are five times more likely to sacrifice our family time for professional and material gain
• So many top business leaders could not be brought together at any other time of the day
• Etc. Etc. Etc.

While we may consider ourselves to be supermen (we went to IIT / BITS / IIM / XLRI, and other assorted branded institutes, for God's sake - how can we not be supermen??!!), we cannot work productively beyond certain reasonable limits. Most Indians, in my experience, choose long hours over productivity - and we just need to pause and contemplate our national productivity statistics for a moment to understand the consequences of this choice.

Sacrificing the "important" for the "urgent": The relative importance of the "important" over the "urgent" has been eloquently discussed in myriad platforms. However, this relative importance assumes that a business leader takes on only as many "important" matters as he can fit into eight (or twelve / sixteen) hours a day, while leaving some time for those urgent matters which invariably crop up without warning. An agenda cannot be prioritized if the business leader takes up more important goals than can reasonably be fitted within his working hours (which happens when there is inadequate delegation). Often, this results in frustration and despair (for the business leader's secretary, if not the business leader himself) and the easiest response becomes simply selecting the “urgent” matters without worrying about the important. Urgent matters have a “here and now” element which can provide some semblance of comfort (and even accomplishment) while important strategic matters with deferred consequences may be easily swept under the carpet.

Lower levels of performance: All “important” strategic issues, if not dealt with on time, become “urgent” (There is a limit to how much can be swept under the carpet without forming clearly visible bumps. Urgent matters rarely allow time for meaningful action and the consequent negative results often transpire within a very short period of time and are visible to everyone. As a result, deferring the important till it becomes urgent often leads to significantly lower levels of performance, often very visibly.

Passing the buck, and consequently, lower morale: As performance suffers, a natural (though unfortunate) consequence is the search for scapegoats. This, as is known to practically everyone in corporate environments, leads people to focus on covering their posteriors rather than focusing on value creation. And as this vicious cycle gathers momentum, morale plummets.
Institutionalization of “bad practices”: The worst consequence of this vicious cycle is that it gets institutionalized. When this level is reached, meetings on Sundays are considered “business as usual.” Yes, people do attend such meetings “for the money.” But can one build institutions with mercenaries?
To be honest, most business leaders (including family business leaders) in my experience are very aware of this situation. Most of them honestly and sincerely want to correct it. But the challenge is how to correct it. Actually, that is not true. There are tomes written by experts and consultants on how to correct it. The challenge is how best these methods can be implemented. As David Maister so aptly puts it – the question is not which diet is best for the fat smoker, it is which diet will the fat smoker commit and stick to.

Family bandwidth and family businesses

In a family business, the most important and valuable resource is the family's bandwidth.

There is a limit to what an individual can do in a day, day after day. And at the end of the day, the success of an enterprise is driven by the people behind it, who take the decisions, raise and deploy resources and generally do everything that the enterprise "does." In today's business, the value of "management bandwidth" is very well recognized.

So, for successful business growth, management bandwidth needs to grow both in size and productivity. Assuming that a generally successful business employs generally capable and efficient managers, there is a limit to the growth in management productivity (through systems, processes, support staff and technology interventions). Often, the only option left to drive growth is to recruit the additional management bandwidth.

And there lies the problem in family businesses. One cannot "recruit" to expand ones family. Of course, families also grow through strategic alliances (marriage!) and organic growth (procreation!), there is often a gap of 25-30 years before any significant management bandwidth can be added in a family business. This is further complicated by the emotional ties governing the family dynamics and the capability levels of the family member in question - One cannot fire ones son as easily as one can fire a CEO. Summing up, as a family business grows, the bandwidth of the family members in the business often becomes the most scarce and valuable resource in the firm.

The situation is all the more critical in countries like India. Traditionally, business in India was (and still is) largely dominated by family businesses. In a socialist, highly regulated and corrupt environment, only those few grand families which had the necessary resources, network, enterprise and luck were able to succeed in business - the common man just had no chance. Understandably, these families zealously guarded their "competitive advantage" within themselves and soon they became the pillars of Indian industry. Their resources and capabilities were enough to deliver 2-3% growth year after year - The Hindu growth rate.

While the nature of the Indian economy is drastically different today, it is still dominated by family businesses, though the number of such families has grown significantly. I suppose the inherent risk-averseness of the Indian middle class explains the lack of professional entrepreneurs in our society (tomes have been written on this subject, so I will not discuss it.) While a band of young, ambitious and highly qualified professionals are driving the 6-8% growth in this country, the overall control over the private sector resources still remains with a relatively small number of families.

Therefore, the value and scarcity of "family bandwidth," and by extension, of "family capability," is today more critical than ever before. While there is enormous focus on the training and development of professionals, the coaching and training of "family heirs," one of the most critical resources for India Inc, often remains under the radar.

Should we be worried? In my next post, I plan to discuss a few critical challenges emerging from mismanagement of family bandwidth, that I have observed.