Category : Strategy

 
Would you like to invest in a social business, or help fund a film, or be a part of a startup that you believe in? Crowdfunding now makes it possible. A concept that takes off from crowdsourcing, crowdfunding expands the boundaries of participation in what was earlier considered an area that was quite private and formal – funding.
 
Quite obviously the internet has facilitated this trend, in much the same way as it has led to the democratization of so many other areas. The potential of crowdfunding is immense. On one hand, it provides budding entrepreneurs, aspiring artists or social activists to raise money for causes or initiatives they strongly believe in. On the other, it provides an avenue for people, across the world, who otherwise may not have an opportunity to invest/contribute to ideas that appeal to them. Read this article for more on this http://www.crainsnewyork.com/article/20130212/ARTS/130219985  
There are a number of portals that work on the principle of crowdfunding. You can check out some of the more popular portals:
 
• Kickstarter
• IndieGoGo
• GoFundMe
• ChipIn
• RocketHub
 
Interestingly one of our clients, Micrograam, a social business, has also adopted the crowdfunding model to bring together lenders who can offer relatively small sums of money and borrowers from rural India who have needs that cannot be satisfied through banks and formal financial institutions. Check out their portal here http://www.micrograam.com/  
On another note, crowdfunding is not only a means to raise money, it is also a smart way to build your brand and test your ideas. I remember way back that the Infosys listing on NASDAQ was more a brand building exercise rather than a fund raising one. Likewise, by floating your idea on such a platform you build visibility across a number of potential investors and users.
 
Companies now run test marketing campaigns on crowdsourcing platforms to check if there is a willingness to pay for their products, or sufficient appeal in their idea. Here is one such recent example http://www.rockthepost.com/posts/updates/1230/Villy-Custom-Bicycles-Build.
 
To conclude, crowdfunding is yet another indicator of the world becoming flatter. It is yet another proof point for how the internet has changed the way mankind collaborates.
 
Have you come across any other interesting crowdfunding experiences?

 
Every company wishes to be perceived as a thought leader in its niche. Did you know – the term was coined less than 20 years ago by an editor at Booz Allen Hamilton. So, what does it mean?
 
Wikipedia defines it as “Thought leader is business jargon for an entity that is recognized by peers for having innovative ideas. Thought leaders often publish articles and blog posts on trends and topics influencing an industry.”
 
Forbes has a longer version: “...A thought leader is an individual or firm that prospects, clients, referral sources, intermediaries and even competitors recognize as one of the foremost authorities in selected areas of specialization, resulting in its being the go-to individual or organization for said expertise…”
 
In order to become one, an individual or a firm needs to have, amongst other things, “originality” and “innovation” in thought. In today’s IT world, I have come across numerous examples of people flooding the internet with half-baked ideas and content in the name of thought leadership. But, there are some good ones too:
 
1. IBM with the “Smarter Planet” campaign is indeed a Thought Leader when it comes to Analytics

2. Wipro being the only Indian company in DJSI, is another Thought Leader in Corporate Sustainability
 
So, how does a company portray itself as a Thought Leader? This exercise has to start with a carefully thought-out strategy, like any other project. Don’t start off with “How can use Thought Leadership marketing to get more leads and sales?” Instead, get started by answering the following questions:

Once you know what you want to do, the next step is plan the implementation – 60% of which is the content and 40% – the distribution of the content through the right channels.
 
Do you think businesses have understood what it entails to become a Thought Leader? Have you come across some good examples?

 
At Prayag, we had recently completed a report on non-linear models prevalent in the IT services industry. As you know, non-linear models involved any form of revenue contribution that is not linked to headcount. Typically, in the offshore (read Indian) market, revenue growth implied proportional headcount growth as well. This is not a sustainable model for the usual reasons – talent shortage, attrition, training costs, infrastructure costs and so on. So, companies especially the Indian ones have started looking at non-linear strategies where revenue growth is not directly proportional to headcount growth.
 
For our report, we conducted a detailed study and spoke to several contacts in the industry including senior folks in charge of non-linear initiatives, delivery, sales, marketing in IT services companies, industry analysts, equity analysts and other industry experts. These interviews combined with our own research was pretty insightful and helped us arrive at a big picture.
 
Overall, our findings showed that the offshore players are looking at non-linear initiatives in a similar way – delivery initiatives and outcome based models. Here again, more progress has been made on the delivery initiatives front in the form of solution accelerators, platforms, shared services and output based pricing. Among the main offshore players, TCS is ahead in terms of investing in platforms and solution accelerators. TCS’ platforms as part of its BPO offerings in particular have made a good start and gaining traction. It was interesting to note that companies are thinking similarly and we did not find anyone with a strikingly different approach. Our research shows that Wipro’s shared services model called Flex also appears to be a successful initiative. On the revenue side, HCL seems to have made some strides in offering risk-reward partnerships to its clients especially in the hi-tech area. All these initiatives are not a new concept for a seasoned company like IBM – they are far ahead in this game and the whole process of developing accelerators and solutions is fairly mature.
 
However, we need to be cognizant of the fact that these non-linear initiatives form at the most 10% of overall revenues and more work needs to be done for it to scale and address some of the serious challenges . For now, our assessment is that non-linear initiatives need another five years or so to scale and contribute meaningfully provided customers cooperate and companies continue to view it as an important part of their strategy. With the tepid Q1 results being announced by the large offshore players, it appears that will necessarily have to focus – anyway, at Prayag we will continue to monitor this important trend and keep you posted.

 
When I was studying communications 12 years back, my Professor often said, “Questions are never stupid. Answers are. So ask.” Today when I have lots of questions, I feel stupid. Maybe I need someone as strong as my Professor to help me find the answers and make me more confident.
 
So here I go.
 
Do IT marketing teams really do marketing? Or focus on branding and corporate communications? I am confused.
 
As I understand, building a brand is all about engaging and involving every touch point inside and outside the company using a broad set of communication vehicles. And this can include both strategic and tactical activities. Most initiatives like PR, analyst relations, events, internal communications, ad campaigns etc can all be part of the broader umbrella of branding. Be it building an online presence; demonstrating thought leadership; developing internal campaigns; advertising or even CSR, these initiatives are towards enhancing the brand image and perception of the company. Well, each company may look at brand building in their own way based on their priorities.
 
While the default remains visibility and awareness, sales enablement still remains a gap. Is sales enablement the most difficult thing for marketers? Does this require marketers to get out of their comfort zones?
 
Some of the marketing folks have often said that branding and communications is all about sales enablement. While it is essential to help the sales organization communicate value and differentiation in clear, consistent and compelling ways, do the marketing folks believe that the right information is being delivered to the right audience in the right place at the right time to help move the sales opportunity forward?
 
Some marketing folks I know have often said that sales don’t need us. Does it mean that the age-old sales and marketing love-hate relationship is responsible for marketing to focus more on comfortable pieces of branding and communications?
 
Help me with answers. I am confused.

 
I was talking to the US based CEO of an emerging company focused on the ISV space recently to get a feel of the market. What he had to say made me reassess the general view that the economic recovery is well on its way. It appears not.
 
Venture funding is still low although it has picked up from earlier quarters. Consider this, in the first 3 months of 2011, 364 tech companies received a funding of $4.8 billion. Of this, Facebook itself accounted for $2 billion of the funding followed by Groupon with $377 M. Removing the Facebook deal, the value of funding has increased by a low 8% only. Of course, the other way of looking at it is that good ideas can still attract funding.
 
Overall, it appears that the US market is still limping along – both at the enterprise and ISV level. Cisco has already warned about its performance in the coming quarters. For companies targeting the US market, the progress would be difficult but opportunities do exist. Value has to be demonstrated convincingly and cost savings still remain the overall driver.
 
My take is that the US is still an attractive market for companies large and small. There is no equivalent market in terms of scale and opportunities yet. Of course, the going will be tougher but the returns may be well worth it. Do you agree?

 
The many recent changes at the helm in leading technology companies, both in India and globally, as well as our experiences in carrying out strategy assignments for clients, makes me ponder over the many links between strategy and leadership.
 
At one level, the onus is on the leader to infuse strategic thinking into the company- this is especially true in a company’s growth phase when one would be faced with choices of direction frequently- example, growth over profits, or profitable growth, how much risk to take, inorganic vs organic growth options, diversifying capabilities vs deepening strengths and many more. As a company reaches steady-state (if there is ever such a state in today’s dynamic business climate :)), the questions and issues change, but the role of leadership is equally important. One hears these statements- nothing can impact this company anymore- they are on a roll etc. Yes, true in part- but if you look all around, whether it is Nokia and Microsoft or nearer home, some of the problems that Wipro has been facing, and even the recent not so exciting results of Infosys, you realize that no company can take it easy, even for a bit. I am sure all these companies will handle the problems and emerge unscathed eventually, but that calls for leadership.
 
In this context, one wonders what is the role of strategy consultants? Yesterday I read an article about the turmoil at the Hindu newspaper. Being a family run business, the group has been undergoing problems for a while. They called in McKinsey to help them out, but, according to the report, no one is prepared to heed McKinsey’s advice.
 
Thus, it is clear that the right leadership is indispensable for a company’s growth and sustenance and the role of strategy consultants is to act as an objective sounding board, validate approaches and perhaps stimulate fresh thinking. Strategy consultants and leadership teams however can work hand in hand to produce superb results.
 
What do you think?

 
I have been doing quite a bit of research on social media off late, trying to create a social media messaging strategy for a client and I came across this extremely effective YouTube campaign called “Will it blend?” by “BlendTec”. If you are a regular YouTuber, you would have come across this 4 year old initiative. A really simple idea to promote blenders: just take the most absurd objects and test them out in the blender (from a baseball to an iPhone) and create videos out of it. Their YouTube channel has had 150,188,265 upload views !
 
That is what organizations who have invested time into social media marketing ought to be doing – showcasing their products and services in a funny/innovative manner! For eg: A video on how even a 3 year old can use a software will highlight its ease of use, in a more eye-catching way than having a dull looking suited guy demonstrating it!
 
So, here is the competition idea :
 
Give me your out-of-the-box idea on how IT companies can showcase their offerings on YouTube in a zany way. The best idea will be used in my social media strategy report

 
As I was reading the ET today, there were two news items that caught my attention – one was Accenture hiring Avinash Vashishta of NeoIT fame to take over their India operations and the other one was an article about Indian firms being shy about acquiring local companies (reference to the iGate-Patni deal). Now, if you think about it, both are connected.
 
We know that while Indian companies are trying to go up the value chain, the non-Indian counterparts are trying to establish a sound offshore presence – yes, this has been discussed before. While few Indian companies have made the right moves and are climbing the value chain gradually, similarly there are very few non-Indian companies that have been successful in setting up a scalable offshore organization. Looks like this is still continuing.
 
One name that immediately comes to mind when you think of companies adapting to the offshore concept is IBM which has done a great job surely. Accenture on the other hand has been really slow on this front – they have around 50000 people in India split almost equally between BPO and IT services. Part of this is due to the company culture itself – it is still partner led and we hear that the Indian operations have little access to the client. Clearly, Accenture is taking a long time to change from a consulting, partner-led approach to an outsourcing approach which requires a more decentralized approach. Obviously, setting up India operations is not sufficient – the organizational culture is key to making it work. It remains to be seen how a person like Avinash Vashishta, someone very familiar with outsourcing can make the change. Mr. Vashishta comes from a background where he has been on the other side – helping buyers identify the right vendor and working with both sides on the deal. Today, the IT services business and the offshoring scenario has evolved quite a bit and Mr. Vasishtha has a hard job ahead.
 
Moving on to the article which said that Indian IT companies should seriously consider acquiring local companies – it discussed the scenario where if Wipro had picked up Patni, it would have helped Wipro widen the gap with Cognizant which is close at its heels. Agree that in a sense, it will be easier to acquire local firms in terms of integration effort and compatibility and so on. However, we need to remember that Indian firms are looking to go up the value chain – the Tier 1 players at least have a scalable organization more or less. They need to be looking at growth that is not dependent on headcount – the much talked about non-linear initiatives. Acquiring a Patni or a Satyam (when it was up for sale) is a short term fix for growth and will not really address challenges such as attrition, HR issues, higher end services and so on. Many of the Tier 1 players are serious about non-linear growth and the recent TCS results was proof of that. A Patni or a Satyam purchase makes sense for a iGate or TechMahindra as this helped them scale quickly as opposed to a longer organic route. Our view is that Indian companies should look to acquire only those companies that will help them deliver higher value services or nudge then in the direction of non-linearity– they are more than equipped to handle the regular IT services business.
 
What do you think? Do you agree that the efforts from Indian IT services companies as well as MNC players are continuing in the same way?

 
It is quarterly results time and all eyes of industry eatchers are on the big 3 – Infosys posted good results, but TCS has done better- clocked $2B revenues and also improved its margins.
 
This is great news and what is more, has come primarily through new client wins (added 30 last quarter) which goes contrary to the general buzz of continued slowness in the market. TCS’ revenue from North America is over a billion dollars. Interestingly, all verticals and markets have shown double digit growth.
 
It also appears TCS is able to now take advantage of scale benefits as its margins have also shown good improvement even while its revenues are growing at a fast clip.
 
At a time when doubts are being cast on the continuing demand for offshoring, thanks to the political rhetoric from the US, TCS results go to show that there is still room for quality players.
 
TCS has shown the way, without doubt……….

 
You keep reading in the news about giants buying companies frequently. For example, IBM has made 12 acquisitions since Jan 2010 – all except one involve product companies. Barring Sterling Commerce, the rest appear to be small purchases. HP on the other hand has acquired 4 companies in 2010 but all of them have been over a billion in value. What is the strategy behind these moves? IBM has purchased companies in the cloud computing, security, data management and analytics space. HP has bought Palm and 3Par who are into manufacturing and a data management player. HP even managed an acquisition when there was no CEO. It appears that these companies want to be a one stop shop for all technology needs. With the services business taken care of, are the IBM and HP’s moving on to other areas? IBM has stated that its focus will be on the high-growth, high-value segments indicating these acquisitions were meant to address that. HP on the other hand wants to address that segment of customers who look for end to end solutions. Both these giants are following a different path – time will tell which one worked better.