Can you run your enterprise on excellence?

I was reading Vidhu Vinod Chopra's interview on his style of film-making. Please do not pay attention to his contrarian views, but listen to his style.

"Ferrari took us four years to write, 3 idiots took us 3 years" , Vinod Chopra said in his interview. He further added that 'Munnabhai MBBS III is in writing for last 3 1/2 years, but he is not willing to start it because the script has not yet come out well. Please remember that with Vinod Chopra's background, if he makes a film, he can collect 100 crores in first three-five days.  What makes Vinod Chopra work on excellence, when others run after money?

Take another example of Aamir Khan. Here is a man, who could have earned huge money, by doing more than one film at a time. But he refuses to do more than one film at a time, lets go opportunity to earn money in his 'hey days'. Film industry actors 'justify doing as many films as they can' because their shelf-life is short, as they say. But what makes Aamir Khan not worry about his shelf life, when other actors behave differently?

If you think that I am giving big celebrity examples only, let me give you a simple example of an entrepreneur. Let us call him Vikas. He is an entrepreneur in Nashik. Started his first unit supplying to Foundry manufacturer in early 1990's. Went through huge difficulty during recession. Now runs a unit of wire. Employees from 1990's are working with him still. ( Please remember that entrepreneurs find it difficult to retain good people !). Vikas follows highest standard guidelines of managing hazardous material called REACH. Has no target set for his unit, other than producing excellence. What makes entrepreneurs like Vikas practice excellence in business, where entrepreneurs do anything to justify 'business'?

What do you find common between Vinod Chopra, Aamir Khan and Vikas? They practice excellence, and believe that it will fetch them the desired revenue. For them, Money is means to end, not an end by itself. For them, money is a byproduct of what they do, not the end by itself. For them, doing something 'right' is more important than doing something 'ok', even if that ok is acceptable to the majority.

More importantly, they have one important quality. They are not impractical and unrealistic zealots who practice 'quality' for the sake of 'quality'. Instead they understand the constraints of their excellence and are willing to work with it. For instance, Vidhu Chopra knows it takes so long to make these films and is willing to live with that constraint. Even when he makes a movie like Eklavya, he knows that the audience is not ready for it and is willing to wait for it. Or Vikas is ready to work with limited customers to ensure that his quality is 'paid' the right value.

Like others, they do not blame people and customers for not 'paying' them enough for their quality. Instead they are contended and wait for the right opportunity to come. This ability to wait for the right opportunity separates them from the herd. Instead of chasing money and projects, they chase 'excellence'.

I know of many individuals who have managed to chase excellence without chasing money. Money just followed them. It requires a specific mind of mindset and a 'set of skills' to do it. Do you have it in you to chase excellence in your field?

Is AI a failure of business model?

Read a very interesting article on Air India written by G. R. Gopinath, founder of Air Deccan, that explains the misfortunes of AI. If you have read the blog on 'what is a business model' you will appreciate this article better. We had also discussed Airlines as a case scenario in this blog. Please read this before you explore the understanding of business model here.

Here are some of the significant highlights:

1. AI is overstaffed. It has high employee to Aircraft ratio as compared to other airlines. For instance, AI has 475 employees per aircraft as compared to the only profitable airline  Indigo which has 70 employees per aircraft.

2. You will assume that high employees may be utilised to increase the aircraft utilisation. Unfortunately AI has the lowest figure of utilisation which is 30%.

3. AI's total cost per available seat km ( CASK) - which is an industry benchmark to measure airline inefficiency - is the highest in the world. It is four times Indigo and five times Air Asia's.

Is this enough to indicate that it is a failure of business model? Yes and No.

No, because technically speaking, any company should manage its business model smartly, be it Government owned or privately owned.

Yes, because when competition comes in, the management has to become very 'flexible' in responding to the market conditions. It is this flexibility that cannot be imparted to Government company. Be it in Telecom, Banking or Airlines, once the industry is privatised, Government-managed organisations always seem to suffer because they cannot take business decisions, that in retrospect may look 'biased and mistaken'. The right decisions are therefore postponed, and unlike in a monopoly environment, the company has to pay the price for its delayed decision making.

For instance, as G.R. Gopinath has suggested, that AI has some good business options even at this time. For instance,

- AI has a massive investment in Maintenance, repair and overhaul ( MRO) of Aircraft. It has also high employees because it has one of the best maintenance facilities. AI can bifurcate this operation from the rest of AI, like what Lufthansa Airlines did, and earn very good income from its operations. Will AI be able to do this because of its nature - Government managed entity?

- AI has got huge investments in real estate. It can be sold to pay off the employees who can be given a golden handshake thus reducing the cost of the airline per aircraft to a manageable proportion. Will AI do it?

British Airways and Lufthansa Airlines, the two Government airlines, who went bankrupt managed to take the above decisions. Will AI manage to do it?

Instead we hear that Indian Government is pouring even more money ( about Rs 30,000 crores) in AI. This is like putting more and more money, to recover the already-lost money. This is a psyche of a gambler because of which he loses everything. Not a psyche of a shrewd businessman who may feel emotionally, but still has to take a rational decision at the end?

What do you think? Is AI a case of failed business model or a 'poorly executed' business model?

Are you using interdependency in your career?

Today, i was reading the news in the Times of India about the Norway case where Norway Government had taken a formal custody of two children , 1 and 3 year old, from their Indian parents. 

Whenever i discussed this news with the various friends in the last two months, everyone strongly suggested that "Norway Government is biased and is completely wrong in taking the custody of the two children". Lot of 'unattested evidence' was also mentioned such as the family saying that 'their children had been taken away because of cultural differences - such as, the fact that the children were fed by hand, or that they slept with their parents." Whenever i argued that there could be 'another view' or 'fact' that we are not aware of, my argument would be summarily dismissed.

Why am i discussing this case on the career blog? Because, our tendency to see things in black and white (single dimensional way) blocks us from using the 'interdependency' that is prevalent in our society today. Our society is so interdependent that, instead of running away from it, it helps us more if we can utilise that 'interdependency' for our benefit.

Successful entrepreneurs are masters in using interdependency  in their careers; they find and exploit this interdependency, instead of shunning away from it. If you are not using it in your career, then your tendency to see things in single dimension in relation with people is blocking your path.

When you view relations between people in single dimension, you always believe you are always 'rational, smart, and right while others are 'stupid, arrogant and irrational' whenever you are in conflict with others.With regards to the issues between people, you always conclude that " there is only one right answer", that "any rational person can see that your view is right" and if someone does not see it that way then " he must change his view'. It is always 'their problem'.

With this single dimensional view, even when you see a conflict between Norway Government and Indian family, you view Norway Government as 'arrogant and high handed' while Indians as ' right and rational', perhaps because we are all 'Indians'. In the conflict between Norway Government and Indian family, only one view is 'right and rational' and if other person ( in this case the Norway Government) can change its view, the conflict will be settled. A person with single dimensional view will not even wait for any evidence to conclude something else, like all my friends did.

Successful entrepreneurs, on the other hand, behave differently. They have a multi-dimensional view of people and their relations. In every conflict, they assume that 'a situation has multiple dimensions' because of which one may see something which other misses and vice versa. Due to these different 'angles', even reasonable people may disagree on something. They therefore believe that other people who disagree with them ( or in conflict with them) may also be as rational and right as they are. They do not attribute traits like 'stupid, irrational and arrogant' to others, nor to themselves.

For instance, in the case of Norway Government, they will 'assume' that Norway Government may be right because it is seeing something which they have not seen. Now it has become public that the parents of these two Indian children do not have a healthy relation with each other and they have filed for divorce. Now we know that Norway Government did not publicly said anything about the parents, because 'this information was confidential' and public disclosure of such information may may 'hurt the children when they grow'.

Besides using interdependency in their relations, this view also pervades the personal lives of these successful entrepreneurs. As we have discussed in this blog, even their personal view about themselves is 'multi-dimensonal'.They believe that even their motivation and confidence has multiple dimensions; it is true only in a specific dimension ( or context).

Most corporate professionals learn to use interdependency because the colleagues and bosses make them realise that their 'single dimensional views' may be wrong. But if you are an entrepreneur, you do not have colleagues and bosses to tell you that your 'views' may be single-dimensional. What are you doing to capitalise on the interdependency inherent in the society?

Entrepreneurs are lucky in developing their skills

Kanpreet is an excellent IT developer. He developed a product for schools. He had to decide whether to spend his time/efforts on 'selling', 'delivery' or 'product development'. He chose to remain in delivery (70%) and product development (30%) and develop his skills in these two areas. Is Kanpreet's approach right for his business? 

Graduates working in corporate constantly face a question "what should i do next", because they are trading in a skill. Entrepreneurs like Kanpreet, on the other hand, never face this question because they are trading in the 'product/service' that requires multiple skills. Instead, entrepreneurs have to work backwards from 'what is required' to sell the product/service and then attempt to fill the gaps in skill through their own skills or by bringing someone else.

This ends-driven approach of entrepreneurs of developing skills is far more efficient than the means-driven approach of skill development followed by corporate professionals. Corporate professionals try to learn any skill in the hope that it will 'fit' with some unknown future requirement. You will therefore find them spending considerable time in developing new skills such as learning Excel, ERP software, foreign languages, communication or time-management. But as they rarely get time to 'practice' those skills, they remain 'certificate' skills. On the other hand, entrepreneur's ends-driven approach of developing skills is very efficient, because they 'practice' the skill immediately after 'learning'. And because practicing immediately synthesises 'why' and 'how', one learns the skill quickly.

Despite having an advantage over corporate professionals, an entrepreneur like Kanpreet still faces four critical questions in skill development:

1. Should he develop an existing skill that will increase his 'strength' or a learn a new skill to compensate for his 'weakness'

A more efficient way is to develop the skill that will increase his strength further instead of learning a new skill. Kanpreet seems to have followed this approach, as he was excellent in IT. And as we have seen in Vinay's case, it is not easy to focus on one skill.

However, if the skill is critically required for the 'business unit', one should find a 'partner' with that critical skill. If for instance, 'selling' skill was critical for Kanpreet's unit, he would need to find a partner who is good in selling. If that is not possible, find an alternative person with that skill, even if high salary has to be paid for the person. Only if these options are not feasible, one should try to learn the new skill. And while learning such a skill, it is better to find an 'expert' who will 'coach' instead of learning by reading a book, because, the risk of failing is high as an entrepreneur.

2. Fill the one-time skill-gap by using consultants 

One time skills are required for a business unit from time to time. They are required for a business to grow from one stage to another. Many entrepreneurs, unable to fill this gap, either sacrifice growth or make several mistakes in negotiating their growth.

For instance, when a business unit has to grow in size, one needs the skill to understand 'what is required to grow the business in volume' (called scaling requirement) and how to fill the gap given the constraints. This is one-time requirement that should be ideally filled by hiring a consultant. Please remember that the scaling requirements of a business unit are just not physical and financial, but are also mental. Filling the mental-gap is more difficult than filling the financial gaps !

Or when the unit is seeking external funding, it has to institute several regulatory and managerial practices to comply with the norms. A consultant is ideal to fill this one-time skill gap adequately.

3. Which non-core 'small' skills should he learn

An entrepreneur may have to learn some 'small' skills because they 'enhance' the core ability of entrepreneur. Typically these skills could be presentation skill, communication skill, skill to hold meeting, skill to delegate, skill to use accounting figures to take decisions or even skill to strategise.

While learning these non-core skills, an entrepreneur has to ensure that the skill is not just learnt in a 'class' but also 'practiced' afterwards. It requires far more effort to use the skill in the entrepreneurial unit, than to just learn the skill in a class.

4. Which Core skills should he learn

As we have seen earlier, the skill to 'understand a business model' of your industry is a core skill. An entrepreneur does not have any option in learning this skill. A MBA teaches this skill, but given the time constraint, doing MBA requires too much investment of time and money. Entrepreneurs should ideally earn this skill either through a business consultant or a coach.

As an entrepreneur, what are you doing?

Why do we face difficult career challenges today early in life?

I met Mandar, a different type of entrepreneur, in a town near Pune.

Mandar has been working in a software industry for last 5 years, working in a well paid job. After 5 years, he decided to start something of his own, because he wants to be in the town where he has lived and do something 'meaningful'.Now it has been 6 months after he started his new venture which has undergone several 'changes' other than the intended ones. He has been facing stiff challenges. Why do professionals face difficult challenges in their lives today than their fathers?

Today's professional faces many more career challenges than their fathers because of two reasons : altering aspirations and increasing options. 

Altering aspirations

My father, who worked for 46 years, in one company never believed that the job should also provide 'job satisfaction'. He could not finish his diploma because of lack of funds. For him, only one reason for having a job was to earn 'money'. Because he was fighting for food and shelter, his aspirations never went beyond that. 

On the other hand, because he provided me with the qualification ( of becoming an Engineer and MBA) and the necessary minimum 'shelter', my aspirations had changed in my first job. I already was aspiring for 'job satisfaction' after 5 years in my job. Today's individual seek 'job satisfaction' immediately after the first job. 

Some individuals with a well developed 'reflective mind' ( type 2 mind) seek even more. At the age of 30, i helped one of my coachee 4 years back in fulfilling his aspirations of doing something in the field of education, by working for a NGO in education, while simultaneously earning enough money to sustain himself. Have you heard about Narayanan Krishnan, who had been shortlisted for an elite job in Switzerland, whose life course changed after a chance visit to a temple?

Aspirations have changed in the young generation because the increasing prosperity is compelling them to think of 'what will they do with their life' much earlier than their than their fathers. Our fathers did not face that question early, because it took them their entire life to secure their family with food and shelter. We are fortunate ( or unfortunate, depending on how you see it) because we have to face this challenging question very early in life. And more importantly, these aspirations are fuelled by the increasing opportunities that are offered by the global world.

Increasing opportunities of the global world

The global world had brought the opportunities to the doorstep. Today, you can sit in your home, and serve a customer sitting in US because of the internet. I know of  'teachers' who teach mathematics to US students by connecting through internet.

The global world has also brought in multiple options to work: part time, full time, or even on project basis. Neha, left her job to take care of the child for three years. And now she works part-time from her home, as a clinical researcher, so that she can fulfill both her aspirations: of being a good mother as well as being on the top of her profession. Like Neha, everyone today has a different 'definition' of job satisfaction. There is no universal definition. And the opportunities in the market are also helping us realise these 'definition', so to say.

The world of NGO has become so professionalised, that one can 'contribute' to the society without sacrificing 'money'. I have several friends of my age who work in NGO and therefore find an ideal place to combine their interest and skills together in one job. 

Summary

As we saw earlier, career management has become more complex because of this two-way relationship between our aspirations and opportunities. Aspirations are fuelled because of increasing opportunities, and more aspirations generate more opportunities.

The environment today is also conducive to fulfill our aspirations. Mandar only has to just find how to fulfill his aspirations by thinking differently about his career and skills. He cannot use the skillset of his father. If he has to learn to use the new environment for his own benefit, he has to think and act differently. Only changing aspirations won't help; he need to acquire the new skills to fulfill those aspirations. 

For instance, one of the most important challenge that individuals face early in life is in finding meaning in life. 'Finding meaning in something' is not a left brain sequential process. It is in the realm of your right brain. And therefore, it is not in your control. Right brain outcomes like satisfaction, meaningfulness, happiness cannot be achieved directly by Will. They are typically the by-products of some other actions, of the way you live life. This is a new skill that one has to learn early in life. 

Can an entrepreneur develop managerial talent?

Narayan has started three companies in three different segments in last 20 years. First it was coke-based fuel company which did not work out because of the technical glitches of the innovation. Next he ventured in starting an automobile ancillary company, supplying to Maruti, which he ran successfully for 12 years. Then he went on to innovate another product, an automated chair for physically handicapped. The product could not be marketed successfully because it could not be aligned with the existing business model. He asked me a very pertinent question "Haven't i developed a managerial talent'.

As you would have noticed from the above example, Narayan seems to have developed an entrepreneurial talent. Entrepreneurial talent is about finding a 'new need' that is unmet by the market, bringing together the resources required to 'convert that need into a product', and then finding a business model to 'manufacture and market the product'. As Eric Beinhocker, author of the Origin of Wealth, says wealth is created by finding solutions to problems. Entrepreneurs do this marvelously. Even when they make mistakes, like Narayan has done, they know how to 'learn' from the mistake in time and develop talent to 'find new solutions to existing or new problems' all the time.

Managerial talent

Managerial talent building is more complex because 'manager's job is not of one single type; it has many variations. For instance, first level of management which we discussed earlier is easier to understand. The manager of a 'functional department' like marketing, sales, production or administration is the first level of hierarchy in an organisation. At this level, the managerial jobs look similar.

However, as you view the hierarchy beyond that level in a typical organisation, you will find considerable variations in a managerial job between companies. In order to understand the variation of a 'managerial' job in a company, let me give you a 'classical' definition of different managerial functions (according to VSM model of management)

System 1	The entire collection of interacting Operational units.
System 2	The system responsible for stability/resolving conflict between Operational units. ( Inside view)
System 3	The systems responsible for optimisation/generating synergy between Operational units. ( Inside)
System 4	Future plans and strategies. Adaptation to a changing environment. ( Outside view)
System 5	Policy. ( setting the ground rules)

To simplify the above, System 1 is called operating system, while system 2,3,4 and 5 functions together are grouped under a Metasystem. Although System 1 functions are easy to understand, it also has many variations, as we  found in the project manager's job of a software company. That increases the complexity of developing managerial talent of even the first level job of system 1. Because of this variation, someone who can do a job of System 1 in a company may not be able to do the same job of System 1 in another company. For instance, a project manager of BI project cannot do a project manager's job of Java development project in a software company, because of a completely different skillset, unless additional support is provided to him.

In contrast to operating system, Metasystem functions are distributed unevenly in a managerial hierarchy in a company. Every company distributes it differently. In some company, system 2 and 3 are conflated in one managerial job. In some, system 1 and 2 are mixed. Variations in managerial job at a metasystem level are huge. Many professionals are not even aware of these variations, because they are invisible to the eye. Only when they move from one company to another (with the same designation), they find the difference because they fare poorly in a new job. Very few professionals realise that their poor performance is due to mismatch between system functions. They simply assume that they fared poorly in a new job because of 'bad boss' or 'wrong culture' !

Some of the functions are more confusing. For instance, the 'rule setting' function of System 5 like Quality or Process are sometimes 'devolved' to such a low hierarchy in a company, that senior management does not even 'realise' that they are the 'owners' of these system 5 functions.

Entrepreneurial talent

As you would understand from the above explanation, entrepreneur is perhaps doing all the five system functions together. In an automobile ancillary company, Narayan may have had a different 'functional' manager, but he seem to be doing all the five system functions. This diffuses the focus, because of which Narayan may not have done enough work in a System. For instance, because he was supplying only to one supplier (Maruti), his experience with working on System 4 would be limited. Because he was the owner, his ability to perform System 1 and 2 functions paradoxically would not have got developed. In short, his managerial skill is likely to have remained at a very low level. Due to the above situational dynamics, an entrepreneur will always find it difficult to develop managerial talent.

In contrast to his managerial skills, Narayan's entrepreneurial talent seem to have developed to a significant extent. His skill of reading a business model must have developed to a significant extent. His technical skill of understanding need and converting into a product also seem to be exemplary. He also must have developed a wonderful 'network' of resources who he can use for 'innovating' a product. In short, his entrepreneurial talent is well honed.

If you are an entrepreneur, you have to understand your strength to develop your entrepreneurial talent.  Narayan's strength seem to be 'technical skill of innovation'. What is your strength?

An entrepreneur has to be 'smart' to nourish his talent

If you observe the three steps in building a talent, you will appreciate that the talent can be built only when it is focused on a task. Talent is your 'capacity' to do a 'task' easily and fluently. Task could be of batting in cricket (sports), playing piano ( music), painting on a canvas (arts), or writing a software program, designing a bridge, managing a set of operations that produce cars. (these are called knowledge tasks).

However, as an entrepreneur, one has to perform many tasks. An entrepreneur tends to become jack of all but master of none, if he 'allows' it. Very few follow a path like Vinay.

Vinay had a huge interest in Electronics. So despite getting educated in Metallurgical engineering, he took a qualification in electronics after his one year graduation, and manage to shift to Electronics. He encountered a problem in Large voltage measuring instrument and manage to 'find' an elegant solution to the problem, which until then were imported. To manufacture those instruments, he partnered with two friends - one who had an experience in manufacturing, and another in marketing - to start his company in 1990's. By willing to share his 'innovation' with others, he manage to focus on his 'core skill' of electronics and just focused on 'product development'. Today after 20 years, he is one of the world's authority in these type of instruments. 

Entrepreneurs find it difficult to follow the path of Vinay due to several reasons. Sometimes the reason is due to over-attachment to 'money'. For instance, Vinay was 'smart' enough to share the benefit of his 'product innovation' with his two partners. Many entrepreneurs are not so 'foresighted'. They look at the 'loss' of money instead of seeing the 'gain' of concentrating on one's strength. 

But Vinay is not the only entrepreneur who has focused on one 'talent'. We know of many celebrity figures who did the same. For instance, Steve Woznaik collaborated with Steve Jobs to start Apple, but later withdrew, because he wanted to develop his 'technological talent'. You will find many successful companies have more than one partner, because it enables each to concentrate on 'one skill' and built into a formidable talent.

Entrepreneurs also find it difficult to follow the path of Vinay because of ignorance. For instance, they do not know that once a talent is built, and the market knows about it, one may prefer to go alone. For instance, Vinay who remained in partnership with the two partners, split and started his own firm, after twenty years in 2010. By this time, his product innovation capability was so well known and established in the market, that the other two skills (marketing and administration) became 'support skills' which were required in a 'diluted form' that could be filled with 'hired' employees. That is a market paradox ! Initially, when a person is starting a company with no background, talent is required to survive. When the name is established in the market, one can 'make do' with average skill.

I know of several entrepreneurs who lost their market suddenly because the main equipment manufacturer such as 2-wheeler company or an automobile company chose to change its location. Concentrating on ' core skill' and building it into a 'talent' is less risky in today's global market, instead of building a company that becomes 'extinct' because the market changes overnight.

What are you planning to do?