Friday, May 24, 2013

Today's Organisations - Horses on Steroids

Present models of ONLY ROI driven businesses are not sustainable.  CFO of Narayana Hrudayalaya today quoted in ET- CD, " kind of returns PE players are asking is not possible in healthcare industry." 

Yes healthcare industry is not only PROFIT driven but PEOPLE driven. Number of people impacted while making some profit to take care of future investments. Mere ROI focus is not sustainable nor desirable.

Why only healthcare ? Every industry today is in severe cut throat competition. Ethical conduct is replaced by END only matters,  Q on Q and ROI, ROCE kind of performance matrix. 

Balance Scorecard approach by some of the corporate is welcome step but how much it has helped in stress reduction and happiness enhancement is a  matter of research. 
These PEs and their insatiable appetite for ROI is deciding ROI benchmarks world over.  

Huge ROI will drive happiness for a few at the cost of unhappiness and stress for many. 

Today's organisations are like Horses on steroids in race course. 

Huge bonus and extravagant packages at the top level makes the organisation look like a race course. Bets on the houses are so huge that they have to run and run and win at all cost. 

Fortunately horses run only in race course but ROI hungry Shareholders & CEOs run all across the society. Examples of Ranbaxys and Satyams and many more unearthed are the products of such rush for crazy ROIs.   

Tuesday, May 21, 2013

Why I lost my Customers ?

Recently a friend of mine told me that he has lost one of his customer for 9 years , for meager small price difference. 

All of us whether in business or profession face customer attrition. Yes they leave us. Those who are involved in customer acquisition know how difficult it is to get one. So many meetings , follow up , promises and discounts offers it takes to get a customer.

Therefore when we lose our customer its painful as well as loss making proposition. Retained customer is an income , acquired customer is an expense as it takes 5 to 7 times the money to acquire new customer than to retain a one. 

As the customer gets older cost of acquiring him gets written off over the period of time. It is always better and smarter to not only retain a customer but also get referral from him to get a new customer. 

A value of customer is = profit out of his repeat purchase + referral leads he offers (which saves 5 to 7 times of cost of acquiring a new customer) 

But if customer is so important to any businesses important question to think is why do businesses lose customers to competition ? 

  1. - Better Price 
  2. - Better Speed to Delivery
  3. - Better Understanding of the customer
  4. - Better Proximity
  5. - Better Quality 

Most important are Better Relationship (Human aspect of dealing & not CRM) and Better Customer Experience (Emotional Connect). 

Sometime you may wonder why ever after focusing on the above 5 tangible aspects , your business is still losing customers ? 

It may ( MUST ) be because you are ignoring completely the two intangible but critical aspects of business - customer relationship and customer experience. 

Wednesday, May 15, 2013

Are you LIKABLE?

Are you as a person likable to fellow workers , fellow family members ? 

Are you as a company likable to employees , customers, suppliers, shareholders & community around ? 

People like to deal with what is likable. Therefore one of the parameters to evaluate the performance and target to be aim for is more likability. 

Impact being likable can have on individual and business is enormous. Sometimes its better   to evaluate this on unlikable parameters. 

Dave Kerpen author of the book Likable Business describes seven of the ten things in his presentation.  

  • Listen - employees, customers and everyone 
  • Surprise & Delight
  • Story Telling 
  • Transparency 
  • Authenticity - Just be you 
  • Team Play
  • Gratefulness
Those who are further interested and have 55 minutes of time to invest may see this presentation by Dave Kerpen Video on How to be Likable Company

Social Media is either making companies aware why it is important to be likable or forcing them to react and change to become likable.  

Tuesday, May 14, 2013

Is your business making money?

Is your business making money? 

Answer may be NO but you may not KNOW. Yes many businesses are just managing cash flow and not making profit. 

Is it your money that you are splurging on ? 

It may be of your creditors or banks or government. 

Is your networth positive after you writes off dead stock , dead investments , difference between book value and scrap value of your assets and bad debts ? 

Is your ROI more than risk free rate market return ? 

You may have money in bank but do you have assets value more than your liabilities? 

Take a critical look at your MANAGED financials.You may cook the book to fool government and investors but be cautions about your uncooked real books that is fooling you and taking speedily you on the road to bankruptcy.   

Many companies survive before they burst merely on the basis of positive cash-flow. Cash flow is critical but at the same time it misleads. It makes us believe that our business is making money. But unless you are vigilant on the above aspects of profit and loss and Balance Sheet , only positive cash flow dependency can be a disaster.

Friday, May 10, 2013

First Impression is only the First Impression not the LAST

First impression is the last impression is highly overrated  and bias thinking. This mindset does not believe in any scope for improvements. 

Life is all about continues improvements and NO ONE can be perfect at the first time. We have in life and in business many instances of great first impression and lousy impressions thereafter and vice versa. 

Yes we have to give our best at the very first time but that is not all. We can always learn from mistakes, from others's experience , from customers feedback. First impression is not and can never be the last impression. 

Yes , not improving continuesly is a cause for concern. Worrying too much about the first impression will pull you back to create any impression at all.   

Try and create the great first impression and work to make it better at every next impressions. 

First is not the last , first is just the first. 

Thursday, May 9, 2013

Lessons for Political Campaigners from Business Campaigners

When business campaigners i.e. advertisers talk they talk about qualities of their products and services and try to differentiate from the competition without referring to the bad qualities if any of the competitor. 

They don't criticize competition but communicates how they can make a difference in the lives of their users/consumers. 

Consumers by and large are smart and they know good and bad about the competing products. 

In contrast our political parties and leaders spent large part of their election speech in mud slinging on opposition and competitor.  Consumer & Voters wants to know HOW you are going to make a difference in their lives. They need your plan of action to bring the desired change, your case studies of past performance, your views on various problems and issues need resolution. 

Spending time on criticizing others is doing NO good to any one , neither to listeners nor to speakers. Leave listeners , views and voters to decide what is good for them without referring what is bad about your competitors. They just want your support in deciding in their selection and best way to do that is to demonstrate WHAT you can do to improve their lives. PERIOD.

Congress leaders going to Gujarat and doing negative campaign against the Govt will not work and similarly Modi going to Karnataka and do mud slinging against the Congress also will not work.

In Gujarat people know what Modi has done so they don't believe in Congress and in  Karnataka people are aware what BJP has done so they will not believe in negative campaign against Congress by Modi. In both campaigns parties had to demonstrate WHAT and HOW of changing lives for better of voters from present situation. Both have failed in that and so their campaigns have also failed. People are first interested in bettering their lives and they care about corruption only AFTER that.

Communication makes all the difference. FOCUS on positive campaigning.  Political campaigners may take some clue business campaigners. 

Wednesday, May 8, 2013

Leadership Vs Front-facing Candidates & Managers

Leaders can inspire but it is the local leader at  the voters touch points who can drives votes. Only leaders without right followers cant win elections. Mass leader with right candidate is the killer mix. 

Right Candidate
(non corrupt , performing perception & great people skill)

Likely Win

Mostly Wins

Wrong Candidate
(corrupt , non performing perception )

Mostly Loses

Likely Lose

Election Matrix

(Qualities of candidates and leaders are in relation to its opponent)

Uninspiring  leader
at the top

( Incapable, uninspiring, corrupt & ineffective & non inclusive image)

Inspiring Leader at the top

( Inspiring { thought leader , communicator} , capable, non corrupt, effective, executor, inclusive image  )

The above matrix is not only applicable to political parties  but also to all businesses. Howsoever strong leadership you may have at the top if your ground level customer focus managers are failing company will be in trouble.

People will become customers if they see Richard Bronson at the top but soon they will disappear if the touch point manager/staff is uninspiring.  Only dependency on right and inspiring leadership is not going to yield the desired result. 

Sunday, May 5, 2013

Failed Communication !!!

I received birthday wishes from the only club I am a member of. I was pleased to see the envelope wishing me birthday in advance. 

When I further dwell into the communication my happiness doubled when I saw they will treat me with 1/2 kg of cake on that day. 

But ...

Yes there is a big BUT  towards the end. They asked me to intimate them in advance how many people will join me to a party which they assume I will offer on my birthday at their restaurant when they will serve me a free cake... 

I realised that this was not a birthday wish but only a sales letter in disguise. 

Companies must refrain their urge to sell every-time they communicate with customers. Sometimes a sincere wish can do wonders and more sales then these kind of letters. 

This letter at the end didn't serve any purpose. Birthday wish was to sell and sell will not happen when I see such selfish approach to wish me and lure me through 1/2 kg of cake.

Focus on genuine experience creation , genuine wish and then only genuine sales will happen automatically. Many a times focus on sales pitch is the reason for no sales. When  customers see ingenuity in communication and approach. 

Are you genuine when communicating with your customers? 

Saturday, May 4, 2013

Are you balancing for ROI or overall HAPPINESS ?

My last post Is Balance Scorecard relevant today? received good response from practicing professionals in one voice they stated YES Balance Scorecard is and will always remain relevant. 

Balance Scorecard is relevant but what we are out to balance that need to change according the competitive business , social and environment land scape.

We can not have ROI only mindset to align all other balancing factors serving that. ROI at what social, ethical, emotional & environmental cost? Present balance scorecard do not takes into account these factors. 

After identifying all these stakeholders a balanced strategy to make all of them happy should be worked out. All of them deserves equal weightage. Thereafter further breaking down is to be done to achieve happiness of each of the constituents.     

In achieving only ROI based balancing other aspects like governance, ethical and socially responsible behaviors can & shall not be ignored. All these must be incorporated in overall balance card.

Wednesday, May 1, 2013

Is Balance Scorecard relevant today ?

Dr Robert Kaplan & Mr David Norton introduced powerful model of Balance Scorecard during the last decade of 20th Century. It clearly makes the organisational focus broader merely from financial focus.  Model has become successful and used by many organisations across the globe. Main tenet of the models are as under: 

1) Financial Perspective : To succeed financially how should we appear to our shareholders. What are our financial goals? 

2) Customer Perspective : To achieve financial goals what should be our customer strategy? 

3) Internal Perspective : To achieve our financial and customer goals what kind of business processes we must have? 

4) Growth and Learning Perspective : To remain competitive what kind of people competency we should have or develop?

It is working well for many organisations. However in changing times this balancing also should under go change. 

What are we aiming to balance through Balance Scorecard ? As can be seen from the tenet it is only and only about WHAT part of strategy. Again on top of the strategy it is  Financial Perspective and all other perspectives are serving the financial perspective. 

It has to change. Financial Perspective and WHAT part of the strategy is important However unless its HOW is defined with keeping in mind environmental effect of doing business , social & ethical behaviors and making all stake holders happier by rightful conduct , it fails to balance the society in which the business operates. 

We first need to think to balance the negative impact the business generates before we decides about balancing business strategy for self use. New tenet of balance scorecard should be as under: 

1) Happy Customers : How to make our customer happier when they are dealing with us ?

2) Happy Employees : How to make our employees who are working for us happier ?

3) Happy Community : How to conduct business with social commitment, ethical conduct with every stakeholder incl Govt.  ?

4) Happy Shareholders : Here financial, internal processes and learning & growth perspectives of existing Balance Scorecard can fit in.

Balance Scorecard in its existing form is missing some of the important balancing requirements.  

Do you think differently ? Please share your views.