Tips to doing business in India

Courtesy my friend Shrinivas Deo, saw this practical advice from Dian Schaffhauser on working with India. Having worked both in India and overseas, I can attest that all the observations are valid and the tips useful.

Her 18 tips are listed below:

–> TIP 1: Be ready for true hospitality.

Traveling in the US means renting a car and conferring with the map or grabbing a cab and showing up at the front office for your next business meeting a few minutes before you’re expected. That isn’t the way it works in India.

“It is likely that when you arrive, you’ll actually be picked up at the airport by the person you are supposed to meet and taken to your hotel,” says Dr. Schomer. “Much will be done to make sure that you are comfortable, maybe a meal that is completely social for you to be welcomed and a lot more hospitality and welcoming events than you are accustomed to in this country.”

How do you respond? Accept it graciously and don’t consider it a waste of time or an imposition on your personal space. Avoid saying, “Well, I really would like to be left alone.” According to Dr. Schomer, that goes against the rules of Indian hospitality.

–> TIP 2: Expect true culture shock and fuzzy thinking.

Since a lot of flights to India arrive in the middle of the night, you probably won’t be at your brightest that first day. Do what you can to rest up before business begins. Dr. Schomer recommends getting to the hotel, sleeping, taking a shower, having a quiet breakfast or lunch and spending some time adjusting. In other words, don’t think you’ll arrive and get right to work.

Along those same lines, even though we hear a lot about the “new India,” the fact is that the old India will hit you the moment you leave the airport — “crowds, the intensity of everything on the street, great variations of wealth and poverty, the sheer intensity of the culture,” as Dr. Schomer describes it. “People stare at you, pressing in on you. There’s lots going on and everything is just different — the temperature, the feel of the air.” Your brain is “not going to be 100% functioning.”

No matter what your usual company policy is, build in buffer time at the beginning of your trip. It’ll more than make up for the extra expense of hotel nights in sharper thinking on your part.
–> TIP 3 Remember to pack for business.

In an Indian business setting, men normally wear lightweight suits with ties. If the day is extraordinarily hot, you can dispense with the suit jacket, but start with it on and see how your hosts are dressed.

For women, pack lightweight pant suits with sandals. Leave the short skirts at home. And, just like in the typical US setting, the air conditioning can be pretty cold — if it’s working properly. So bring a shawl or a jacket.

–> TIP 4: Don’t expect to start punctually at 9 a.m., or 10, or even 11.

“Being respectful of other people’s time is not an Indian value, nor do people expect you to be very respectful of their time. It is just not important like it is [in the US]. Things are very fluid and constantly changing,” says Dr. Schomer.

Unlike in the states, where you make appointments a month ahead of time, when you arrive in India, you “almost start from scratch” on setting your schedule.

Ask your host, “Is 10 still a good time for us to meet?” You may find that the meeting times have changed.

It is not that the meeting won’t happen, says Dr. Schomer. “It will happen.” But she advises against scheduling back-to-back appointments, because often the first meeting won’t start on time. It will start whenever the primary person shows up. Likewise, the question about when it will end is also open ended.

That means you need to leave an enormous amount of time between appointments, especially if your next appointment is in another part of the city.

In fact, Dr. Schomer suggests that if you’re meeting with more than one service provider, plan to schedule no more than one meeting in a day.

–> TIP 5: Expect and intend to spend time on developing the relationship before you get to business.

Avoid the American tendency to get straight to business. Take time to let the person get to know you and for you get to know him or her. Suggests Dr. Schomer, “Talk about things that are not directly business related. Establish a pleasant relationship. It’s very important. India is a relationship-oriented culture… If you don’t do that, it is hard to go beyond that. You need to show that you are interested in your colleagues as human beings and not just as business entities.”

Safe topics of conversation:

* Your curiosity about things in India, showing an interest in what you are seeing and what you are experiencing.
* Sports — especially cricket. If you don’t know anything about cricket, that doesn’t matter. You can ask for an explanation of the basics.
* Movies.
* Travel to foreign places.
* Education. “They are very proud of their education and they are probably interested in what kind of an education you had,” says Dr. Schomer.

Topics to avoid:

* The weather.
* Poverty in India.
* The caste system.
* Election and foreign policy-type discussions.
* Questions about immigration.

So how will you know when it’s time to move on to the business at hand? Dr. Schomer suggests taking the lead from your Indian colleague. That might be half an hour into the conversation. It might be slightly shorter or longer. “But don’t rush to it,” she says.

–> TIP 6: Be prepared to use last names until you’re told otherwise.

If you’re meeting people for the first time, you’ll probably want to use last names until you get to know people a little bit better. Don’t immediately jump to first names. “In the IT world especially, you may find people switch to first names,” explains Dr. Schomer. “But when you first meet them — especially if they’re high status in the company you’re meeting with — use the honorific and their last name.”

Prepare for that before you go. Learn how to pronounce the names and find out whether somebody is a Mr., Miss or Mrs. (“Ms.” is rarely used in India.) Suggests Dr. Schomer, get information about everybody you’ll be meeting with from whomever you’re corresponding with prior to leaving.

Of course, names can be lengthy and look deceptively hard to say. How do you get through possible mispronunciation? If you’ve obtained that list of people you’ll be meeting with ahead of time, practice with the help of somebody in the US who’s familiar with Indian names. If that isn’t an option, once you get there and you meet somebody, just ask: “Mr. Sravanapudi, would you please help me to pronounce your name right? I need help pronouncing it.” Then practice it a couple of times after you’ve been told.

It’s important to get it right for two reasons: 1) You won’t be corrected if you get it wrong; and 2) if you get it right, it helps on the relationship-building that you’re there to do.

–> TIP 7: Get straight in your head about who’s in charge.

Be clear about the roles, titles and positions of the people you are meeting and to make your own role, position and title clear. Roles, titles and positions are important in India.

Explains Dr. Schomer, “There is a respect for hierarchical structure, rank and for position. People are not comfortable until everybody is clear on who they are.”

What’s the top title? It’ll probably be a managing director heading up the operation.

And you can expect the seating arrangement for your meeting to reflect that hierarchy. That means you’ll also want to ask them where you should sit, rather than simply taking a seat. You’ll probably be seated in a way that faces the lead person.

At the same time, you need to talk up your title in your own company’s hierarchy. Although VPs appear to be a dime a dozen in the US, it makes for an impressive title.

If you’re female, plan to put a special emphasis on your title. And if you’re at the meeting as the representative of the president or COO or CEO, make that clear too. “That will immediately give her respect, which she might not get as much of if she doesn’t show what her hierarchical rank is,” says Dr. Schomer.
–> TIP 8: When the business card trade takes place, pay attention.

Be prepared to exchange your card with the person in charge, or the person who seems to be leading the meeting. Don’t volunteer to give your card to everybody without knowing who they are. When you take a card from somebody else, pause long enough to look at it (though don’t get “ceremonial” about it, Dr. Schomer advises).

Make sure to use your right hand to receive the card and to hand over your card (unless physical circumstances prevent that).

–> TIP 9: Consider traveling with at least one other person.

This will help you in a couple of ways.

First, it enables you to uphold your stature. If you tend to take notes during a meeting to keep track of details, that second person can handle that function for you. Otherwise, you won’t look like the “big picture person” you’re trying to come across as. You’ll simply look like an emissary for somebody more important back at the office. That means the Indian decision maker won’t treat you as an equal.

Second, if you’re trying to remember everything that’s being said, you won’t be able to pay attention to what’s going on around you, as we’ll get to shortly.

–> TIP 10: Don’t be surprised if other people you haven’t heard about show up at the meeting or if other business takes place around you.

Aside from the occasional under-the-table Blackberry use in the US, we like to be very clear about when the meeting is going to be, what it is about and who is going to be there. “Things are more fluid in India.” Says Dr. Schomer, “Several people may show up along with the person you think you are meeting and it is not going to be clear to you why they are there.”

These people may not be introduced, nor will they say anything. He or she may simply be somebody of lower rank in the organization who is just there to give support. Says Dr. Schomer, “It’s not a great idea to direct questions at people who seem to be there in the support role.” Make sure you know who the chief person is with whom you’re meeting. Then direct all your conversation to that person unless you have been asked to do otherwise.

Besides people walking in and out, expect phone calls and questions to the boss during the meeting. “The Indian environment is strong on multitasking,” says Dr. Schomer. “So you may be sitting in a meeting with the head of a unit, and he will pick up on the phone and talk while you’re sitting there, and somebody will knock on the door and will just walk in to ask him a question, and he will just interrupt his conversation with you and then go on. In the Indian business style, this is not considered rude.” In other words, “don’t feel like you’re being blown off.”

–> TIP 11. Provide the biggest possible context for why you are doing whatever you want to do.

Americans have a propensity for boxing in conversation — keeping it narrow and focused: “I need somebody to do this piece of our work. How much can you do it for? When can you get it done?”

India has a “high context culture,” says Dr. Schomer. Plan to provide background information about your company, including its history. Then drill down to broader efforts related to that, then to specific initiatives, and only then to the specifics related to your visit. The goal is to help explain why you’re interested in the service provider.

Don’t expect to whip out your standard PowerPoint presentation and run the service provider staff through it. Slides emphasize bullet points and brevity. You want to expand.

Of course, by the time you reach the point of actually visiting India, you’ll already have had multiple conversations with people in the service provider about similar topics. But repetition is a useful practice. As Dr. Schomer explains, “The American mode of presentation is linear. It basically says, ‘OK, this is what I am going to say. I am going to say it. These are the points under each of the things I am going to say. And this is the wrap up at the end.’ Indian conversation tends to work in loops. Circling around and saying the same thing in many different ways, over and over again.”

–> TIP 12: Remember to pay attention to body language. It’ll reveal facets that the words won’t communicate.

You’re finally there in person, in front of a company you may be working with. Don’t act as if you’re still on the phone. Use your proximity to best advantage. “In general, Americans use their own body language as a way of reinforcing what their words are,” says Dr. Schomer. “But Indian culture is more indirect. The body language may be telling you something different from the words.”

Are people looking forward? Are they looking fidgety or uneasy as they say, “Yes”? If so, that may be telling you something.

At the same time, pay attention to how individuals in the room are interacting with each other, so that you understand a little bit of the dynamics of the group.

–> TIP 13: Don’t assume “Yes” means “Yes.”

So how do you tie the body language to the words being spoken? Let’s take an example, such as whether a service provider will be able to meet a particular deadline. According to Dr. Schomer, “We’ll try,” is the “diplomatic way of saying, ‘We really can’t, but we don’t want to tell you.’ Indians have a certain aversion to saying, “No.”

Americans want a direct “Yes” or “No. For Indians, the tendency will be to say, “Yes,” and try to make it happen at all costs. That can create wide miscommunication and variances in expectations.

How can you get at a clear understanding about what people are really thinking? Don’t bring up yes- or no-type decisions in the context of the meeting.

“Meetings are to discuss and to build the relationship and to see what the issues are,” explains Dr. Schomer. “But the real deciding is almost always made offline by the decision maker.”

If you sense hedging, just let it happen. Don’t press for a hard yes or no.

“Just assume that later on you’ll have a chance to sit alone with the decision maker — maybe over a meal. The topic may come up indirectly, and this decision maker may either tell you directly or indirectly that something is unrealistic. “It’s not likely to happen with a whole bunch of other people present,” she says.

What if you’re asking questions and you see heads nod, as if in assent? “Don’t interpret this as a, ‘Yes,'” says Dr. Schomer. “It really means, ‘I am listening… I understand what you are saying.'”

–> TIP 14: Pay attention during those last few minutes of the meeting — because that’s when some of the most interesting insights may occur.

Here’s another reason not to schedule meetings to take place on the same day. If you end having to say, “Well, I have to go in 10 minutes because I have another meeting,” you may miss the most telling points of the conversation.

Also, says Dr. Schomer, the American way is, “‘OK, here is what we are meeting about,’ and you get to it pretty quickly. Then if you have some time left over, you may do some chatting about other things. The Indian way of doing it is more the other way around. You will talk about all sorts of things and sort of circle around the topic, and then in the last 10 minutes of your time together, it will be, ‘Now about that deal we were talking about, maybe we could do this…’ But that may not come up until the end.”

–> TIP 15: You may find out that your host expects to take you out for dinner.

But since dinner won’t start until 9 in the evening, you can ask for a small break in between the end of the on-site business discussion and start of the social hour. (Pose it as their opportunity to provide you with good hospitality: “Of course, you’ll probably want a chance to talk among yourselves. Plus, I know you’ll want me to be alive and well to enjoy tonight’s festivities…”.) That’ll give you a chance to return to your hotel room and freshen up for the evening’s events.

However, if the conversation is going well, you’re learning lots, and you don’t want that break, don’t make the request. In other words, go with the flow.

–> TIP 16: Remember the right hand rule during dinner.

Don’t touch food with your left hand. If you’re reaching for bread, fruit or anything else, use your right hand. Don’t even use your left hand to tear bread apart. Use one hand for the operation. (Yes, this one will take practice — just like using chopsticks, says Dr. Schomer.)

When removing foods from communal dishes, don’t use your own utensils.

–> TIP 17: Stop saying, “Thank you,” so much!

The American propensity for saying, “Please,” and “Thank you,” comes across as a bit funny and unnecessary, even a little insincere, says Dr. Schomer. If somebody does something for which you’re grateful, a little nod of the head will suffice. That way, thankfulness is shown without much fuss and received without much fuss.

However, when the meeting is over and you’re either back home or you’ve moved on, plan to send an email thank-you to your host, which includes a summary of what you think happened during the visit. Frame it as, “My understanding of what we discussed is this… I’m checking in to see if this is your understanding too…”

–> TIP 18: Remember to reciprocate when you’re back in your own territory.

Expect to exchange favors. Act as host to your visiting guests from India — in a way that’s comparable to what you received.

And if you want a more cerebral article on the differences between US and India read this:

Tags: cross-culture, India, business tips, behavior

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HP acquiring EDS — Mark’s new challenges

Just saw the news that Hewlett Packard is in talks to acquire EDS. The announcement is here.

This may be Mark Hurd’s biggest and risky bet to carve out a bigger space in the IT services market. As anyone can see, Mark will face 2 key challenges with this acquisition. Unlike the earlier acquisitions, this one is a big move and hence there is the imminent integration challenge between these 2 companies with different cultures. Given that EDS has a higher market share and also been in the IT services business longer than HP, they are unlikely to submit to the HP model easily. Till date HP has shown distinct conservatism in the services market, by just managing the infrastructure around its own product platforms where as EDS has been more of a risk taker given its background and history. It also has done more higher-end work like complex application design. So, who would call the shots — HP as the acquirer or as EDS with a big client list and a track record of delivering higher value services? We just have to see how this unfolds.

Second, Mark has to transition the combined entity to the right cost structure by shifting significant resources to a low cost countries like India. At least in India both EDS and HP have operations and their merger may not create much problems.

I believe the only way to amount the challenge to IBM would be to set this up as an independent business operation and go after the high margin business. It is only then that the acquisition makes sense. Whether IBM gets affected or not, I can see this impacting Accenture, Cap Gemini and a few others feeling the pressure.

Tags: mergers and acquisitions, IT services, outsourcing, HP, EDS, Mark Hurd

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Eric Schmidt unveils an exciting future.

Eric Schmidt in a very short speech at the recent IBM Partners leadership conference shows to all of us what the future could be in a very interesting compelling way.

Some of the facts:

1. Currently the Internet has 1.3 billion users, with 200 million getting added each year.

2. In Japan, 3 of the most popular books were delivered first on the mobile readers and subsequently done on print.

3. There were just 400 servers in 1983, and now there are more than 500 million servers worldwide.

4. There are 70 million blogs, with over 120,000 blogs being created every day

5. 7 million photos are uploaded to Picasa (Google’s photo sharing site) each day

6. 10 hours of video uploaded on YouTube each minute.

7. 500 million Wifi chip sets will be sold next year.

His most provocative statement of the future: By 2019, there could be a device that could sit on the belt or kept in the wallet that could have 85 years of video on it. You will be dead before you can see all of it. One of the ultimate frustrations in life.

But what he said about Convergence was interesting. Convergence is not everything (services) going into one device. It is entering (all the services) into one server or services in the cloud and hence even if the devices are different, the content in all that will remain the same.

His quote on Breakthroughs was equally profound: Great breakthroughs are closer to what happens in a flood pane. It is not one idea. A dozen tributaries converge and the rising waters lift the genius high enough so that he or she can see the conceptual obstruction of the age.

His entire address and the subsequent panel discussion can be viewed here. Each time I hear Eric speak, I come back with more knowledge and insight. An earlier interview of Eric is also available on my blog here.

As you see this, maybe you should also see some of the other great CEO interviews and discussions. A few are listed here

Tags: Convergence, cloud computing, our future, breakthroughs, collaboration, innovation, Google, IBM, Eric Schmidt, consumer expectations

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Shift happens — Amazing facts and interesting implications

Did you know:

China will soon become the number one English speaking country in the world

The US ranks 20th in the world in broadband internet penetration

If MySpace were a country, it would be the 11th largest in the world

There are over 2.7 billion searches performed on Google each month

47 million laptops were shipped worldwide last year

For some more facts see here.

Tags: future, predictions, China, MySpace, Google, education, perspective

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A leader should know how to manage failures

shri-kalamjis-interview-with-knowledgewharton_030408Dr. Abdul Kalam was undoubtedly the best President that India had.

He talks about the 6 key qualities of leadership and gives praise to his own boss –for the way he handled failure.

His 6 key lessons of leadership:

1. When failure occurs, the leader of the organization owns the failure

2. When success comes the leader gives it to the team

3. Leaders should have the courage to make decisions

4. Leaders should have nobility in management

5. Every action of the leader should be transparent

6. Leaders should work with integrity and succeed with integrity.

He gives complete credit to Prof Satish Dhawan – the Chairman of ISRO of how he took responsibility for the SLV-3 failure. Typical of Dr. Kalam to be unassuming in how he handled the failure himself. I have it from a very authoritative source of how he himself handled the SLV-3 failure. After the failed launch, many of the scientists (including my mother’s cousin)were shocked, embarrassed and some even traumatized. Few even wept. Dr. Kalam himself was apparently quite shocked initially, but retained his composure. 2 days after the failure, he started meeting the project teams in groups and told them that it was a bad failure, but one could easily learn from it. His only instruction to the project teams for the following month’s review meeting was that everyone should discuss what they learnt from the failure. And that note would not go into the official files. He would cut any discussion short if the discussion moved in the direction of blaming other groups.

He didn’t change the project teams though there were a number of suggestions that the team be reconstituted with some members of the team responsible for the failure be dropped. He said only if he were to be removed from his position as Project Director (a request that he made to Prof Satish Dhawan himself, which was declined) then the teams could be reconstituted.

Despite the failure, he trusted the team. His management style didn’t change. In fact at some point when the scientists felt nervous, he was always there to encourage them and his simple message to them, was to do their best and what they thought was to be right.

Subsequently, some of the scientists got transferred to DRDO and worked under him in the missile program. And that included some of the scientists and engineers who had erred in judgment during the SLV -3 program. He just didn’t hold their failures against them.

His short poem is a remarkable case of simplicity and clarity. He writes:

Learning gives creativity

Creativity leads to thinking

Thinking provides knowledge

Knowledge makes you great.

Another instance of simplicity, clarity and profound wisdom:

“Peace comes from strength, because strength respects strength.

His interview at Knowledge@Wharton is another gem! To read, see the attached pdf file.

Tags: Learning, creativity, knowledge, knowledge grid, urban-rural divide, thinking, peace, strength, empowerment, vision, Dr. Abdul Kalam

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Business catalysts — New name or a new model?

A very interesting way to look at new business intermediaries which surprisingly shifts value. And some of them end up disintermediating the traditional relationship between the service provider and the user. Prof Richard terms as matchmakers or business catalysts — just another name for those companies. While I have yet to read the complete book, I am curious to find out why the catalysts models work in some cases and why it fails in others. For instance, the entire business model of a neutral E-marketplace has failed in all industry sectors. Dr. Richard seems to have cleverly avoided the question of how to build the catalyst business.

I am definitely looking forward to reading the book.

Richard Schmalensee, the former dean of MIT’s Sloan School of Business, unravels the secrets of a curious breed of companies that acts as matchmakers in the corporate world.

If you were a chemistry buff at school, you’d know what a catalyst means. In layman terms, a catalyst is a substance that sparks off a reaction between two or more agents. There is a breed of companies which does precisely that, says Richard Schmalensee, the former dean of MIT’s Sloan School of Business. “A catalyst,” he says, “is a business that adds value by bringing different groups together. Groups that need each other for some reason but have trouble interacting and facilitating their interactions.” Take this newspaper you are holding in your hands. This is a catalyst too. It brings together advertisers and readers, two distinct groups that would otherwise have had trouble interacting.

The world of business abounds with catalysts, and that prompted Schmalensee to author a book titled Catalyst Code (Harvard Business School Press, 2007) along with David Evans, vice-chairman of LECG Europe. Take credit cards, which bring together consumers and merchants, or operating systems which connect computer end users and applications developers, or even your neighbourhood shopping mall, which brings stores and consumers together. And in real life, there are marriage brokers who bring men and women together. “Once you look at the world through this lens, the list of catalysts just goes on and on and on,” says Schmalensee. The current crop of catalyst companies includes the likes of eBay and Google.

Why catalysts are important today:

One would think that catalysts are a New Economy phenomenon. While that’s not quite true, the fact is that catalysts are much more common today than ever before. Says Schmalensee: “These businesses are becoming more important today because of communications, the rise of the Internet and software platforms.” The Internet is creating meeting places for interactions. eBay, for instance, brings buyers and sellers together on a virtual platform. Cheap communications further make it easy for these people to reach out to others. And software platforms help people to be creative.

Catalysts play an important role in sparking off new industries or disrupting old ones. “See what has happened to traditional businesses because of the Internet. Take Google or Craigslist and see what they are doing to US newspapers,” says Schmalensee. Both Google and Craigslist have changed the rules of the game. While newspapers charge for all classified ads in some areas, Craigslist lets consumers list for free and only charges employers for placing ads. In 2004, they shifted $50 million-$65 million worth of advertising from newspapers in San Francisco. Google, on the other hand, offers targeted advertising. US newspapers are dying not just because people get news online, but also because advertisers are pulling support. “It’s a death spiral: you don’t get subscribers so you don’t get advertisers. Advertisers get better places to go,” says Schmalensee.

The chicken and egg problem:

So how does one go about building a catalyst business? Are there any pointers? “There really is no magic bullet to these businesses,” says Schmalensee. “They are complicated. There is no simple ‘here’s what you have to do’. There is a lot of ‘here’s what you have to do’.” But the biggest issue in building a catalyst business, he says, is that of maintaining balance when you are serving multiple businesses. Take credit cards again. “You need to get customers to carry the cards and you have to get businesses to accept the cards. So you have to balance the system on pricing, in rules and various other things, and make it attractive for both,” says Schmalensee. You can’t serve one group at the cost of the other. “It’s not enough for it to be something that every consumer wants to have. Ultimately, consumers are all going to want to have it if merchants want to take it. So you have to think about what the value proposition for merchants is?” says Schmalensee. “You have to solve the chicken and egg problem simultaneously.”

The lack of balance can upset the catalyst model. Take Diner’s Club which was initially the only payment system in the US. It was a very good deal for consumers because they charged merchants 7% of the bill. “But when American Express came, it just took off,” says Schmalensee. “They changed that model: they offered a lower price to merchants and were a little less generous to consumers.”

Or take video game manufacturer 3DO. “The standard business model in video games is that if you break even, you may even lose money on the console but you make money on the game you write and the games other people write for your system,” says Schmalensee. “Instead 3DO said, ‘Why aren’t video games like PCs? Why don’t we make money on the console and then let the game developers use the system for free?’ It was a spectacular failure.” What happened was simple: game developers said that if nobody’s going to buy those consoles, why should we write games? And consumers said if there aren’t any games, why should we buy those expensive machines?
Role of Early Adopters

Early adopters are very important in catalyst businesses “because you have to solve the chicken and egg problem”. Says Schmalensee, “If you can’t get early adopters, you can’t get late adopters, and then you are dead.” But how one can get early adopters really varies across businesses. Let’s cut back to the credit card example once again. “The inventor Frank McNamara gave 200 of these cards to 200 of his rich friends and then went to Manhattan restaurant and said, ‘Here’s the list of people who have this card, what do you think?’ And the restaurants thought that these are good people. That’s how he kick started credit cards.”

Similarly, when Microsoft wanted to launch Windows 2005, it did a massive publicity first aimed at consumers. The idea was simple: they were trying to tell application writers that here’s what we are going to do to sell this thing to consumers so if you write applications, we can get a lot of consumers to buy them.

“In catalysts almost all the profits are made from one side or the other; you don’t do any 50-50,” says Schmalensee. “The thing to do is to really subsidize the side where you aren’t going to make any money and tell the other side we have these people.” In the credit card case, the profits come mostly from the merchants and not from the consumers. “What McNamara did was give them away initially to consumers and tell merchants, ‘Look the consumers have it’. So you give it away free to the low profits side and then raise the price a little bit and start charging. But use the build-up of one group to attract the other.”

When morphing into a catalyst makes sense:

Since the catalyst model does seem to be gaining ground, does it make sense for traditional businesses to morph into catalysts? “I don’t think it’s for everyone,” says Schmalensee. “The important thing is for traditional businesses to think about an alternative provided by a catalyst. It is for a lot of people on the Internet, but it works for the traditional brick-and-mortar businesses only sometimes.”

Some businesses don’t have a choice really. Stock markets, marriage brokers, singles clubs and shopping malls are by their very nature catalyst businesses. But there are others that did morph into catalysts. When PalmSource first brought out the Palm Pilot, they adopted the traditional we-make-and-sell strategy. They provided all the operating system, the hardware, applications, the works… “Why did they do that? Because there weren’t any obvious partners! Nobody was going to write programs for this device unless there were consumers out there who had them and might buy them,” says Schmalensee. Once they became a little successful, the first thing they did was open the software interface to allow others to write applications programs with it. “So, Palm began to count on other people to write programs. And eventually it even contracted out manufacturing. So Palm, over time, didn’t have to do anything beyond the operating system,” says Schmalensee.

(Richard Schmalensee is the former Dean Emeritus Economics, Finance & Accounting at MIT’s Sloan School of Management. He is the author of the Catalyst Code [with David Evans].)

Tags: New economy, google, Craigslist, credit card, AMEX, business model, intermediaries, disintermediation

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Randy Pausch supplements his last lecture

Randy Pausch about whom I have commented on this blog here and here adds a new dimension of his thinking as Jeffrey Zaslow writes a follow up piece, given that they are collaborating on writing his new book –“The Last Lecture”. And if you have still not watched the video, you have undoubtedly missed something very valuable. At the time of writing this post, it had 2,111,960 views and over 1700 text comments.

Here’s the impact that his last lecture had:

People wrote about how his lecture had inspired them to spend more time with loved ones, to quit pitying themselves, or even to shake off suicidal urges. Terminally ill people said the lecture had persuaded them to embrace their own goodbyes, and as Randy said, “to keep having fun every day I have left, because there’s no other way to play it.”

In the weeks after the talk, people translated the lecture into other languages, and posted their versions online. A university in India held a screening of the video. Hundreds of students attended and told their friends how powerful it was; hundreds more demanded a second screening a week later.

In the U.S., Randy reprised part of his talk on “The Oprah Winfrey Show.” ABC News would later name him one of its three “Persons of the Year.” Thousands of bloggers wrote essays celebrating him.

Personally, it had a profound impact on me as I stated in one of my earlier posts. Whenever I feel disappointed or depressed, I go back to his 70 minute lecture and it serves as an elixir.

Well, here are his new wisdom nuggets:

“If I could only give three words of advice, they would be, ‘Tell the truth. If I got three more words, I’d add, ‘All the time.’ “

Advice for his 2 year old daughter: “When men are romantically interested in you, it’s really simple. Just ignore everything they say and only pay attention to what they do.”

“Mistakes are part of the process of parenting,” Randy told her (his spouse). “If I were able to live, we’d be making those mistakes together.”

Randy’s doctor gave him advice: “It’s important to behave as if you’re going to be around awhile.” Randy was already way ahead of him: “Doc, I just bought a new convertible and got a vasectomy. What more do you want from me?”

“I am maintaining my clear-eyed sense of the inevitable. I’m living like I’m dying. But at the same time, I’m very much living like I’m still living.”

“This is my widow. That’s not a grammatical construction you get to use every day…. Pancreatic cancer can be beat, but it will take more courage and funding.”– pointing out to his wife’s photograph as he forcefully spoke about research needed to fight cancer to Congressmen.

“Kids, more than anything else, need to know their parents love them,” he said. “Their parents don’t have to be alive for that to happen.”

And many more.

The complete interview can be found here.

Tags: Randy Pausch, last lecture, goodbye, farewell, legacy, emotional insurance, truth, cancer, pancreatic cancer, inevitable

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A crorepati (millionaire) who lives with his dreams in a hut

We have seen and heard several rags to riches stories. All of them are invariably breathtaking and serve as an inspiration. This story is different.

Sarathbabu is not different because he has managed to graduate from a top engineering school and from IIM (A)– the leading business school in India. He is not different because he turned an after graduating, when he could have easily had the pick of best jobs both in India and overseas. He is different because he chose a line of business that’s deeply linked to his roots.

He is different because he answered his conscience call –one of the reasons for going into this specific line of business is that he can provide employment to lots of people and making an impact on society. His vision, enthusiasm and the cause that he has undertaken is indeed compelling. To him entrepreneurship is not about creating wealth or being independent, but as a means to uplift the poor. He is different because he took the road less traveled despite all the trials and tribulations.

Today he has a car that he brought for his mother who struggled to put him through school. He still prefers to live in the same hut where he was raised.

Read his interview as he shares his experience in the food business.

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Tags: entrepreneurship, road less traveled, rags to riches, millionaire, humility, social consciousness, foodking

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Google’s strategy of harnessing innovation –“crowdsourcing”

Google’s rise to success is predominantly based on the talent it has assembled in house and the way it has managed to use its talent. Yet, what Google did in harnessing the innovation talent outside its own employee base is unique.

Google just closed the Android Developer Challenge, which will provide $10 million in awards — no strings attached — for great mobile applications built on the Android platform. Instead of just spending $10 million in house or working with a few select developers, it has managed to find access to the best available talent on the planet with its Developer challenge program.

Increasingly, companies are using more external resources even in cutting edge high impact product development work. Dell was perhaps the first to start with their IdeaStorm project and now Google follows suit.

Tags: Dell, Google, Android, innovation, talent management, product development, strategy

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