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Posts Tagged ‘business’

Real value of a consultant

March 31, 2014 Leave a comment

Having returned from a loooong hiatus, here’s what I see as a sequel to my last article on consulting >>> Professional reflections – My first year of consulting at the Firm

“Being a great leader is often less a matter of eloquence and more a matter of repetition and consistency.” – Lou Gerstner

Over the last few days, I have started reading a couple of books one of which is “The Firm”, an external perspective on what McKinsey is and what makes up the McKinsey culture. While I can be completely honest that some content in the book will not pass a factual check, there is some content that drew my attention which I wanted to share below.

My thought process is very closely aligned with what the character, Mike Ross, says to his boss, Harvey Specter, in one of the episodes of the TV series, The Suits. It goes something like this, “I know what kind of a lawyer I can be if I am as smart as you, but what I want to learn is what kind of a person I want to be.” (Don’t hold me to the exact wording of the quote… I don’t have as great a photographic memory as Mike Ross).

Anyways, going back to the main topic, I was impressed by what Marvin Bower articulated in his 1997 book, The Will to Lead, as five responsibilities of a professional consultant. I go a step further to add an overarching sixth responsibility that sets the foundation for these five responsibilities.
0. Must hold oneself accountable for being morally right in everything he/she does
1. Must put client’s interests ahead of the firm’s interests
2. Must adhere to the highest standards of truthfulness, integrity, and trustworthiness
3. Must keep to himself/ herself the client’s private and proprietary information
4. Must maintain an independent position and tell the client the truth as he sees it
5. Must provide only services that have real value

A true consultant actually ends up playing four roles:
_ Lawyer for the discretion and integrity
_ Engineer for the scientific, fact-based rigor and precision to the task
_ Doctor for dispensing advice to unhealthy organizations on how to get better and to healthy organizations on how to stay that way
_ Priest for serving clients and being a responsible member of the community

To do this, key ingredients, that Marvin called the McKinsey persona, are:
_ Being selfless
_ Being prepared to sacrifice money and fame for the sake of building a stronger firm
_ Never look for public credit
_ Confident and discreet

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Myopic view of business performance…

December 12, 2010 4 comments

I have always tried to see with interest what story business metrics say… and the recent downturn and its aftermath has shown a different view of how companies mask their actual performance through the metrics they choose.

Look at this scenario… a company growing consistently from 2001 through 2007… at an average annual growth of 10% and then, took a major slump in 2008 and then recovered slowly.
The company proudly states that their year-on-year growth in 2010 is 20% and thereby beating market expectations. This seems to have cleaned all the sins the company had done in the past… and shows that the business is growing and that too pretty well.

However, the missing picture here… because of this short-term view about the past is… that the performance of the company is still far away from the highs it saw in 2007. So, in absolute or even relative terms, if you look at the growth vis-a-vis prior 2-year / 3-year / 5-year levels, the picture is absolutely different.

 

Had they shown performance versus prior year levels, it would have been:
c2008: 14% growth
c2007: 20% decline
c2006: 7% decline

Somehow this seems like the choice of performance metrics is more about convenience than about actual representation of performance. After all, every Chief Executive wants to show a positive view to justify compensation / investments / expenses. This leads to a confirmation-bias and hence complacency in making REAL improvements in business performance. It is high time, companies look beyond temporal measures to just please the market and the financial analysts.

Talking about financial analysts, I have a serious grudge against the whole financial services industry… the way they have made a deceptive business of making money from people’s money without any real value addition to the economy. Perhaps, this is going to be my next post. So, do watch out for this…

The Unholy Connexion….

November 28, 2010 1 comment

Reading about the recent 2G auction scam in India brought back thoughts of the unholy connexion… the business – media – politics trichotomy. And this incident has brought to fore some of the big beacons of integrity – Ratan Tata, Barkha Dutt, Manmohan Singh et al.

I found it very distressing to see how these business and media honchos have played around with politicians to benefit themselves while we, mere citizens, were hoping that all was being done in the interests of the country and its common citizens. This reminds me of Honderich’s Principle of Humanity which stipulates that right actions are actually rational steps, effective and not self-defeating ones rather than pretences, to the end of getting and keeping people out of bad lives.

He defines bad lives as those deprived of six fundamental human goods:
1. A decent length of life
2. Bodily well-being
3. Freedom and power in various settings
4. Respect and self-respect
5. The goods of relationship
6. The goods of culture

Honderich concludes that the Principle of Humanity is better supported than any other sort of moral principle, on the basis of both consistency and certain facts. He takes it that non-consequentialist reasons are not really reasons at all, nor, he says, does the Principle grant any distinction between acts and omissions.

Having listened to the tapes from their tapped telephone conversations (which I presume to be not doctored to misrepresent facts)… it shows very clearly that they were using their power to wrongly influence others and their decisions. For me, today, these very beacons have lost the 4th fundamental human good – respect and self-respect. The biggest fear I have is not having any business role model to emulate… and the risk of turning new business managers into clones of these unworthy people.

At least what I can do on my part is… not taking any journalists on face value, and not giving a S*%# to these business honchos who have damaged the reputation of Indian industry!

Turning east isn’t easy!!!

November 9, 2010 3 comments

While the foremost thing on everyone’s mind is the shift in global economic dynamics… from the wester developed world to the eastern emerging markets, one thing that fails to appear in most discussions is the response of the business world to this new normal.

It isn’t so easy to just close shop here in the US and start doing business in the east… some of the biggest challenges that businesses need to be prepared for in their shift from the west to the east are:
– Consumer preferences: The consumers in the developing world are different from the western consumers in terms of their product/service preferences due to their cultural and social characteristics.
– Public sector involvement: Emerging economics are not mature enough / not used to operating independently of the government… also in most of these markets, government has significant investments in businesses.
– Business model: This is a common differentiator in every market even within the developed world. While for some markets, the brick-and-mortar model might work wonders, for some the online model would suit.
– Disposable income vs. Spendable income: The new consumer has a propensity to spend less than his/her same level counterpart in the west.

Therefore, what businesses need is a radically different strategy to expand their businesses in the emerging markets… requiring different skills, capabilities and a different approach to developing and offering their products/services. An example of this is the lawn mower business in the US. This business would never succeed in the emerging markets since there is no such market in that region… partly because most people live in apartments and even if they live in houses, there is a very negligible proportion of houses with grass lawns. One way this business can expand its market is to build on its agricultural engine manufacturing capabilities and build products for the agricultural sector in terms of harvesters, ploughers et al.

Putting “trust” in the driver seat…

November 8, 2010 3 comments

Often times, business leaders become so hooked onto profitability objectives that they lose sight of their key stakeholders – customers. This has also been one of the reasons why many companies couldn’t weather the financial storm of 2008. Many in the media call it the credit crisis… and if you see, credit comes from the latin word, credo, meaning credibility / trust. So, this unprecedented crisis was actually a TRUST CRISIS where mistrust between different business stakeholders led to the global economic downfall. Just recently, I was having dinner with Charles Green (the founder CEO of Trusted Advisor Associates and writer of a book by the same name) and we were discussing the ramifications of mistrust in organizations. Charles explained that executives seem to forget the basic nuance of trust being difficult to achieve but easy to lose. Even Richard M. Sternhell (the former Managing Principal of Towers Watson) was present at the dinner and he shared his real-life anecdote of how being trustworthy early on in his career helped him become remarkably successful. The primary issue plaguing the business world is this rat-race of who gets to the cheese first. No one seems to have the time to think how credible are the means they’re taking to reach that end.

The worst outcome of all this evil is a “transactional view” to business. Right from the CEO to the floor supervisor, everyone think about every component of the business as a transaction… “Reduce the procurement transaction lead time”, “Increase the revenue per transaction”, “Maximize number of transactions per customer”, “Standardize the transaction”. One thing that is being royally ignored in all this is RELATIONSHIPS. No one seems to think about the relationships in business… be it within the top management or with the employees or even with the customers. And with no relationships, there can be no trust in business!!! It is vital for organizations to start looking at business from a relationship perspective. As Warren Buffet mentioned of the Berkshire Hathaway acquisition of McLane Distribution from Wal-Mart for $23billion – “We did no due diligence. We knew everything would be exactly as Wal-Mart said it would be, and it was.” If I consider this from a consulting career perspective, trust can yield many benefits:
– Give consultants bigger opportunities
– Help consultants have greater impact
– Make consulting work more enjoyable

Charles Green has redefined the trust equation from just a sum of credibility and reliability to:
Trust = (Credibility + Reliability + Intimacy) / Self-Orientation

While credibility is all about perceived capabilities and reliability is about repeated experiences of having promises kept, the new building blocks of intimacy mean how enjoyable it is for the client to work with consultants, and self-orientation is the opposite of how much you hold client’s interest over yours. As my Strategy Consulting professor taught me about a consulting career, the secret to building trust with clients is:
– Build trust by giving trust
– Involve the client
– Help the client be more effective internally
– Make deliverables more useful to the client
– Make client interactions more valuable
– Be accessible, available and knowledgeable about the client’s organization

Don’t forget that the fear of risk taking may hinder you from engaging in trust-building activity!!!

Going for a second MBA…

February 15, 2010 105 comments

The biggest question I’m asked… not just by the admission committee at my target business schools but also my friends n foes alike is, “Why do you need to get another MBA?”

It’s just not another midnight dream that pushed me to think about a second MBA… after all, I cannot afford such a $150K dream as yet!!! This was something I’d planned for right before I moved out of my first business school (IIM) and had kept the question open about when to do it… a full-time MBA if within 7yrs of work experience or an executive MBA if beyond that.

Having done lots of research, spoken to a number of business leaders and mentors, and then doing some internal soul-searching, I came out convinced that a second MBA from a top 5 US business school will better prepare me for my long-term career goals:
1) I matriculated at IIM just two months after completing my undergraduate engineering degree. At the time I saw IIM as a way to round out my analytic and technical strengths with “softer” management and leadership skills. Although I do not regret my decision to pursue a graduate degree immediately following college, I do now understand what I gave up by taking this path. At IIM, I had no “real world” experience to apply my learning’s to. Lacking this context no doubt worked against me as I tried to develop mental models and understand the pragmatic applicability of what I was learning. My lack of work experience also limited my ability to contribute to my classmates’ learning.
Now that I have significant experience, I am convinced this MBA will provide me a much richer developmental opportunity. I will look at management/leadership material in a whole new way and be able to better understand how to integrate those concepts into my leadership “toolkit.”

(2) With my experience as both a consultant and a business leader, I understand that there are still many areas I need to develop further. As I reflect on my career to date, I would like to be more proficient in areas like strategy development, operations management, financial modeling, capital allocation, and tax factors. This MBA will give me the opportunity to focus in on some of these disciplines and make me a stronger business leader.

(3) Given my decision to pursue a graduate degree immediately following undergrad, I did not have the opportunity to compete for certain positions (e.g., strategic consulting associate). Although I am in a better position now for those career options, I am convinced an MBA from any of my target schools will immediately position me very well for pursuing those opportunities and advancing my personal career plan.

(4) Having completed my under-graduate and post-graduate in India and having worked extensively in Asia and Africa, I am looking to bring a global touch to my perspective and management thinking. I know that I would not only get a US perspective on management and leadership but I would also get to study with a diverse class which would advance my international awareness and understanding.

(5) Finally…. the real reasons come to an end. And now, time for glossing it up with specific gyan on the USPs that each school has to offer.

If you’re thinking that I am so patient to write out such a long essay only for the sake of this blog, you’re mighty wrong. It’s just taken from one of my business school essays 🙂

Being forgetful during a crisis is hazardous!!!

May 26, 2009 2 comments

One major pain point in times of this crisis comes from the fact that businesses lose sight of the overall business objectives while reactively maneouvering the downturn.

My thoughts are more in the context of organizations which spawn many other firms from within i.e. a holding company managing a number of large-scale projects.

BUSINESS LOGIC 1

Observation
When the times were good and power was directly derived from the size of the team/organization people commanded, every project was spawned into a separate organization with its institutional overheads. So, what essentially started off as projects being run by a single firm ended up being ‘n’ number of firms coming under one umbrella of the originating company.

Implications
Along with the size comes the cost of managing a gigantic organization. In the context I am basing my thoughts on, these projects being in a conceptualization / early-development stage were by no means having any revenue stream (leave alone it being sustainable) to be self-reliant as an organization. So, when the crisis came along… sustainability became the key question on everyone’s minds.

Where did the logic go wrong?
It is so very commonsensical that there is a maturity cycle for any long-term initiative that an organization undertakes. Firstly, a project runs on a fixed timeline (a start date and a definite end date). So, a project should remain a project until it completes it intended objective and then, when it seems to have reached a certain stage of maturity whereby it can sustain on its own and be an independent organization in itself, should it be spun off from the originating organization.

Had this approach been taken, the current downturn would have been far easier to ride out. There wouldn’t have been a reckless spending on opex in the past, no excess manpower to be laid off in a disappointing manner and no questions marks of the magnitude that are staring at us now!

BUSINESS LOGIC 2

Observation
When an organization was envisioned in the postive, growing economy, even the thoughts of companies not being self-profitable but being there for a larger good was considered rational.

Implications
Many projects have been undertaken with a very sensible big-picture thought of leveraging these projects to propel many other commercial ventures managed by the larger stakeholders of the local economy. However, when the crisis dawned, all this talk of “larger good of the local economy” was thrown out of the window and everyone was asking “where’s the money?” and “is it profitable or not?”

Where did the logic go wrong?
The envisioning of any organization should never be forgotten even in good times or bad times. A strategic project for the larger good of the local economy can rarely be profitable on a commercial basis. And if the dichotomy was not internalized by the powers-to-be, I guess they were in the wrong business in the first place. And by turning over the basic idea behind running a business, more harm might be done to the larger economy in the long-term and hence there is a strong need to stick to the basics and look for other ways to get these initiatives going.

Disclaimer: These are just my personal opinions about a business case I’ve come to know of. Plus, I have not taken any names here and so I shouldn’t be held responsible for maligning any real organization I am associated with or otherwise.