On Seeing The Future

A very interesting interview in the November issue of HBR on foreseeing, creating and executing to reach the future from the legendary John Chambers, Chairman & CEO of Cisco. The whole interview is about business strategy. His perspective of market transition as a precursor to disruption is an interesting read.

Market transition occurs when there is a subtle but clear disruptive shift. It could be social, economic, or technological, and it begins many years before the market actually grasps its significance and adapts to it. A market transition gives you a glimpse of a new opportunity to take market share or move into new market adjacencies, and it can take many forms"

Cisco like others in the high-tech sector is confounded with challenges of long development lead times and as a market leader has the constant challenge of predicting six to eight years ahead in the volatile technology market by recognizing early warning signals.Cisco's big bet is typical of such challenges. John outlines how he has geared the organization for capitalizing on these market shifts by giving his command-and-control style and making decision making a highly collaborative process. He claims that with such mechanisms in place, Cisco which used to carry out one or two initiatives a year currently successfully handles dozens at a time.

A very interesting perspective delivered in a matter-of-fact manner.

After you read the interview, listen to John Chambers “Can IT Strengthen the Economy?” interview at the recent Gartner conference just released at ZDNet.

Labels: Business Strategy, Cisco, Emerging Thoughts

The Competitive Strategy

I am a big Michael Porter fan. Porter returns to reaffirm and extend this classic work of strategy formulation, which includes new sections showing how to put his analysis into practice. In the last few years, Michael Porter has brought economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy. “Porter’s five forces” have shaped a generation of academic research and business practice. Porter contends, if the competitive forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no company earns attractive returns on investment. If the forces are benign, as they are in industries such as software, soft drinks, and toiletries, many companies are profitable. How else do we explain the fact that some fast-growth businesses, such as personal computers, have been among the least profitable industries in recent years. A narrow focus on growth is one of the major causes of bad strategy decisions.
He anchors his premise on industry structure that drives competition and profitability, not whether an industry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry profitability in the short run—including the weather and the business cycle—industry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. Over two decades, Michael Porter has remained consistent as well as developmental – avoiding the standing still syndrome. With competitive strategy , Porter extended the competitive forces analysis to the point of view of industry itself going beyond looking through the prism of markets or of organizational capabilities. Porters framework , after more than two decades since it got into mainstream thinking on competition and strategy.

Labels: Emerging Thoughts, Michael Porter

SAP Plans To Acquire Business Objects

I wrote a brief note for sandhill on SAP's plans to acquire Business Objects. Recently, Oracle moved into the BI space aggressively by acquiring Hyperion. I wrote then,” All I can say is that once can expect more attention on Cognos & Business objects while expecting more traction for players like Outlooksoft". Few weeks later SAP acquired Outlooksoft.
BI is clearly one among the fastest growth area in enterprise application space today. The consolidation in the BI space was expected for sometime. SAP says that the primary driver for the acquisition, its biggest and a reversal of its avowed organic-growth strategy, was the potential to gain new business. SAP is racing towards reaching its goal of more than doubling its customer base to 100,000 by 2010, mainly by winning more small and medium-sized companies as clients. Business Objects has more than 43,000 customers, according to its own data, and made 2006 sales of $1.25 billion. It says about 40 percent of its customers are already customers of SAP.The two companies said they would continue to offer standalone software as well as integrated solutions from an unspecified future date.
BOBJ's preannounced less than expected numbers for 3Q07. This reflects the increasing competitive landscape within the BI sector. Analysts infer that the license growth were negative this quarter. Business Objects also offers its software on demand over the Web as so-called software as a service. SAP plans to start selling a broader on-demand offering next year, though the launch has been delayed, and Oracle mostly inherited on-demand customer-relations service Siebel.com with its acquisition of Siebel Systems. Oracle has spent more than $20 billion in recent years on buying companies to challenge SAP's lead in the business application software space. The business intelligence-software market is worth at least $8 billion and is expected to grow by 11 percent annually until 2010, faster than the wider software market. SAP said the acquisition would be earnings-dilutive by a single-digit eurocent amount next year but would add to its earnings per share from 2009 onwards. Next in line – perhaps players like Cognos, Informatica etc. As an aside, would like to revisit this acquisition 12/24 months from now to see how such mergers benefit the players , industry etc. – and that include the customers.
Read the full note here.

Labels: Emerging Technologies, Emerging Thoughts, Emerging Trends, Enterprise Software, SAP

Jumpstarting Innovation : Making Innovation Commonplace

There is an interesting article/working paper in Harvard Business School’s Working Knowledge - Jumpstarting Innovation: Using Disruption to Your Advantage by Lynda Applegate:

Disruptions in the business environment cause economic shifts that destabilize industries, companies, and even countries. They allow new entrants or forward-thinking established players to introduce innovations—in products, markets, or processes—that transform the way companies do business and consumers behave.
Mature companies understand that to compete today they need to innovate. But finding sources of innovation while still paying attention to the current business can be a struggle. The good news, says Harvard Business School professor Lynda M. Applegate, is that one of the forces that threatens established companies can also be a source of salvation: disruptive change.
This excerpt from a recent presentation encourages executives to leverage disruptive change as a platform for innovation.
Fostering innovation in a mature company can often seem like a swim upstream—the needs of the existing business often overwhelm attempts to create something new. Lynda M. Applegate argues that one of the forces that threatens business can also be the source of a major change : disruptive innovation. She continues that disruptive changes that might serve as the source of innovation include technology shifts, new business models, industry dynamics, global opportunities, and regulatory changes.

Just as they say that business is like running a treadmill, disruptive innovations need not be just novel inventions. Successful innovators take ideas and turn them into opportunities by adding a business model that creates sustainable economic value for all stakeholders. They then go one step further and exploit the opportunity by creating a sustainable business. Together with business model innovation , disruptive innovation can be the harbinger of making innovation the dominant mantra for growth, success and in some cases for survival

Labels: Emerging Thoughts, Emerging Trends, Innovation

The Rising Facebook Frenzy

Christopher Beam writes that if Facebook adds e-mail, IM, and RSS, it's one step closer to becoming as comprehensive as Yahoo! and as popular as MySpace. The rest of the Internet might as well surrender.I wrote about the Facebook phenomenon a few days back.
With the Facebook platform in vogue, outside developers will fall over themselves to deliver great content to Facebook users. The site's growing audience, sterling reputation, and clean look are catnip for corporations. Marc Andreessen points out that veterans of the software industry have, hardcoded into their DNA, the assumption that in any fight between a platform and an application, the platform will always win. He explains,

"platform" is a system that can be reprogrammed and therefore customized by outside developers - users - and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate. In contract an application cannot be reprogrammed by outside developers. It is a closed environment that does whatever its original developers intended it to do, and nothing more.

Fellow irregular Jeff Nolan writes about the new distribution ecosystem play that Facebook is pioneering. Facebook plans to add a "wallet" feature for processing online payments. But for the site to really take off, it needs to have an instant messaging system as easy to use as Google's, as well as an embeddable inbox that connects to Hotmail, Yahoo!, and the like. says christopher. The fact that Facebook hasn't introduced some sort of RSS feed for news—real news, not News Feed news—also borders on inexcusable, he argues - a point which, I fully agree with.

Mark elaborates that Facebook's viral distribution mechanism by which users became instantly aware of which applications their friends are using, can with one click start using those applications, and automatically spread them to their friends is the killer there. Happening in an environment with 24 million active users -- active users defined as users active on the site in the last 30 days. 50% of active users return to the site daily. 100,000 new users join per day. 45 billion page views per month and growing. 50 million users, and a lot more page views, predicted by the end of 2007. An application that takes off on Facebook is very quickly adopted by hundreds of thousands, and then millions - in days! - and then ultimately tens of millions of users.

The API’s released by most other players have mostly been for interacting with a web system from the outside, with limited abilities for . programmability and customizability enabled by a true platform – this makes a huge difference. In a recent meeting , I heard someone saying that MySpace is the next Microsoft and here comes the view that Facebook could overtake Google or Yahoo. I wont endorse either of the points, but I do think that Facebook has the potential to become big. Once cal also expect an IPO from them –that would be followed by buyouts of its competitors by other players or it can also buy players operating in proximate space,. The facebbok frenzy, for sure would create lasting impact in the world of social networks.

Labels: Emerging Technologies, Emerging Thoughts, Emerging Trends, Facebook, Social Networks

Success & Growth Mindset

Friends from Infosys pointed me to Mr.Narayanamurthy’s pre-commencement lecture at the New York University (Stern School of Business). A very inspiring speech with lot of reflective thought built inside. I particularly liked this part wherein he says that the mindset one works with is also quite critical. I never get tired when I get to read /listen to his various speeches – every one has a key message. Here, he points to Carol Dweck’s work as quoted by Marina Kravosky, on the fact that it matters greatly whether one believes in ability as inherent or that it can be developed. ( The Effort Effect is my favourite as well – briefly the theory is that with occasional tumble’s one can reach far greater heights). A fixed mind set creates a tendency to avoid challenges, to ignore useful negative feedback and leads such people to plateau early and not achieve their full potential. The latter view, a growth mind set, leads to a tendency to embrace challenges, to learn from criticism and such people reach ever higher levels of achievement. Read Carol Dweck’s book, The Mindset : The New Psychology of Success. Carol believes that personalities can be changed and holding a growth mind-set bodes well for one’s relationships.

Some of the lessons that Mr.Murthy points to are very telling – excerpts with some edits:

1. I will begin with the importance of learning from experience. It is less important, I believe, where you start. It is more important how and what you learn. If the quality of the learning is high, the development gradient is steep, and, given time, you can find yourself in a previously unattainable place. Learning from experience, however, can be complicated. It can be much more difficult to learn from success than from failure. If we fail, we think carefully about the precise cause. Success can indiscriminately reinforce all our prior actions.
2. A second theme concerns the power of chance events. As I think across a wide variety of settings in my life, I am struck by the incredible role played by the interplay of chance events with intentional choices. While the turning points themselves are indeed often fortuitous, how we respond to them is anything but so. It is this very quality of how we respond systematically to chance events that is crucial.
3. Of course, the mindset one works with is also quite critical. As recent work by the psychologist, Carol Dweck, has shown, it matters greatly whether one believes in ability as inherent or that it can be developed. Put simply, the former view, a fixed mindset, creates a tendency to avoid challenges, to ignore useful negative feedback and leads such people to plateau early and not achieve their full potential.

The Takeaway : The message is perhaps the best possible one that once can hope to get for the event. Around the world, corporates need not just managers but leaders with entrepreneurial mindset, capable of taking the organization to its next levels and help break open new frontiers. The message is very powerful considering that it has come from a person of his stature . His reflections , risk taking abilities, determination and moreover his idea of moving from operational management of infosys, an organization that he has so passionately chiseled and built over a long time and finally giving way to others – all are testimony to his greatness. Mr.Murthy's approach towards his life and the dogged determination to shape his own destiny,his beliefs in being ever hopeful, creating and distributing wealth all point to set of core beliefs – the likes of which are essential for entrepreneurship and growth. Depending on the context, the general approach can change- its like changing the template/skin as when new developments happen and when the world keeps changing – new prescriptions and beliefs may necessarily spring up but the core values are timeless and priceless.

Labels: Business Model Success, Emerging Thoughts, Mindset, N.R.Narayanamurthy