The study abroad trip to St Gallen

The study abroad trip to St Gallen Uiversity, St. Gallen –Switzerland in the first week of Sept ’08 , was a lot of fun. I am sure in between all that fun, I have also gained some perspective on how European businesses operate, but that is hard to quantify.
The trip was very well organized, to say the least. The Swiss, I would say are really punctual, you can tell that from the ubiquitous presence of clocks on anything tall around the Swiss countryside. Our day would start with breakfast at 7:00 , classes from 8:15 , and a field trip or two from noon onwards.
Given all my classmates had known each other for the past one year, it really felt like a trip from junior high days. There was a lot of clowning around in the bus-rides around the countryside, lots of singing and dancing as well.
In terms of company visits, it was kind of light: Google offices in Zurich, Internationa Watch Company (IWC) and Lucerne Mueseum of Public transportation. The class work was interesting, got a great overview of how the Swiss banking system works. It was kind of relevant because they talked a lot about the current financial crisis. Overall, it was a long and fun vacation.

Can Ethics be taught?

This is an intercession with business ethics. Can business ethics be really taught? or learned? Dont we all either have it or dont?
Anyway, this is an easy 2 months with no exams, a time to recharge and prepare for the next quarter

Can well established companies also innovate?

So I am enjoying a break after the finals. Needless to say, this break comes after a grueling couple of months, so it is so very welcome.
Had some thoughts on organization design that we discussed as a part of:

MGMT 850 - 1 Effective Teams and Managerial Excellence

This is about how established organizations can also innovate. It is true that established companies have their advantages in being stable with a positive and steady cash flow. However, often times, these companies are so set in their well-trodden paths that they tend to lose sight of new stuff on the horizon and generally play a catch-up game. So the question is, how does a big well-established firm innovate to effectively play in an ever-changing market?
First of all, What prevents innovation in an established firm?
· Established firms have one or more successful products; the firm’s resources are focused on milking the benefits of the existing product line.
· Every new opportunity is seen in the light of how that opportunity will affect existing product line.
· Culture, as the company ages its resources age as well, and with age comes maturity as well as an attitude of risk-averseness. You may hear a lot of “..from my experience, this can’t be done”

So is there a solution?
Yes, there is a design structure thing called an ambidextrous organization design structure. The image attached shows how the structure of such an organization can look like. Such a design structure can be achieved by separating out a self-contained division for development of new products (Emerging Business Unit) from the division responsible for developing(read ‘milking’ existing products (Existing Business Unit).

The goals and the composition of the two business units are described below:
· Emerging Business Unit:
o Primary goal is to develop new products.
o Should have big Marketing and Product development team:
The Emerging Businesses unit should have experienced resources in big size ‘Marketing’ and ‘Product Development’ team to support its primary goal of investigating new markets and develop new products.
o Should have a small Manufacturing and Sales units.
The ‘Manufacturing’ unit should be oriented towards exploring innovative techniques, with plans to handoff development once the design specs have been finalized. Similarly, the ‘sales’ team should be small and primarily oriented towards experimenting with methods to sell new products.

· Existing Businesses Unit
o Primary goal is to achieve manufacturing operational efficiency.
o Should have a big Manufacturing and Sale subdivision,
To support its primary goal of extracting maximum profits through operational efficiency and producing high quality products using proven manufacturing processes.
o Should have a small size Marketing and Product Development unit to maintain the existing product line.

Finally, there should be a plan to hand-off mature products from the emerging to the existing business units.


· Establish a product hand-off process
New products that are developed by Emerging Business unit should be supported by its sales and production until they start reaching their peak capabilities (this would also be the time when viability of mass producing such a product is assured). At this time, the product should be handed over to the Existing Business unit for further production/and reduction in costs.
Such an organization structure may not be the panacea for innovation in established company but it may be one of the first steps towards one.

The Fat-Cat Effect, Top Dog strategy, the Puppy-Dog Ploy or the Lean and Hungry Look?

Lets try to analyze the following scenario: an enterprise software vendor is trying to decide on the strategy to play in the enterprise software market. Moreover this vendor is a niche player with a popular product and another somewhat less popular enterprise product. What should this vendor do about the less popular product?

Let us use game theory strategies to answer this question. In game theory, we have these four funny sounding so-called ‘taxonomy’ for various strategies. For a quick and dirty (my) definition of these strategies:

Puppy Dog: your competitor will fight back if you fight (play tough), so you do not commit to play tough (be small and look soft)
Top Dog: you play tough and you play hard, you gamble on your competitor to cower in the corner.(be big and look tough)
Fat Cat: You play soft and easy, because you know that your competitor will react by taking it easy as well (be big but look soft)
Lean and hungry Look: You know that your competitor will be at your jugular if you show signs of weakness (play soft) so do not commit to be soft. (Be small but look tough)

To give a slightly academic treatment to these strategies, I am reproducing some stuff from game theory literature (in my own words).

In each of these four strategies, there is an inherent assumption about the way the competitor will react to your actions that is competitor fights backs or steps back. To understand whether your competitor will react in kind or react unkindly we need to understand whether the market calls for so called ‘strategic complement’ or 'strategic supplements’, think of a strategic complement as a strategy wherein the competitors respond in kind. I.e. if player plays tough its competitors will respond by playing tougher or if the player plays soft, its competitors will play soft. On the other hand, strategic supplements imply that competitors respond by giving way if you go in. i.e, when you play tough, your competitor plays soft and vice versa.
Also note that ‘strategic complement’ generally results from pricing or ‘Bertrand game’ where price cuts by one firm results in price matching (equivalent cuts) by its competitor. On the other hand, ‘strategic substitutes’ is generally played in a ‘market share game’ or ‘Cournot game’, i.e. If I capture a large share of the market, the competitor’s share will go down.

Next, we have to decide whether the actions that the player takes, or the commitments that the player makes, makes it tough or soft.
The table above will help us visualise the four scenarios that result from the combination of strategies and the commitments.

The enterprise software market most probably allows ‘strategic substitute’ or Bertrand game. This is why:
1. From the numerous proof-of-concepts (POCs) and discussions with customers that I have been involved in, I have observed that customers do not care much about price. Note: we are talking about big enterprise customers here, not your typical mom-and-pop stores. These products differ from products like Microsoft Windows that are sold to individual customers who are more sensitive to price.
2. Enterprise customers care more about feature set, quality and benefit( than price.)
3. Enterprise customers keep an eye on density of adoption of software in their enterprise; Customers favor software from a vendor who already has a big footprint in their datacenter. I.e, in a datacenter, software from a vendor with a bigger existing footprint keeps expanding its footprint at the cost of software from another vendor. Kind of a market share game.

If we decide that the market for this vendor allows for a Cournot strategic substitutes game, then the two options that this company can chose from are: ‘Top Dog’ or ‘Lean and Hungry Look’. Lets analyze what these two strategies bring to the vendor.

How can such a company play ‘Top Dog’? (or commit to be tough)
· Invest a lot in the development of the new enterprise product to send a clear signal to its competitors.
· Send signals through press releases and advertising campaigns about the intention to play tough.
· Acquire a couple of enterprise software companies to beef up its portfolio and (again) send signals to its competitors.

How can this company play a ‘Lean and Hungry Look’ (or commit not to be Soft)
· Make low-key investments in enterprise software
· Stay clear of head to head competition.
· Reap the benefits accrued out of the popular product to sustain the less popular product.

Which of these strategies have the highest pay off?

The answer to this question requires a long term as well as a short-term perspective. For example, the short-term pay-off of ‘Top Dog’ strategy may be comparatively less than that from ‘Lean And Hungry Look’. ‘Top Dog’ means higher investments and higher all round costs in the near term, however, in the long run, the ‘top dog’ strategy will have higher payoff from increased market share. So, if this vendor is looking for short term pay-off in the enterprise software market, play ‘Lean and Hungry Look’ (stay low-key but do not commit to be soft so that the competitors do not have a free reign, and reap the benefits that accrue out of low losts). For long-term benefits, this vendor should plan to play ‘Top Dog’ and concentrate on expanding its enterprise market penetration

MBA Holiday Party 2007

Yesterday we had our school's Holiday party, and it was lots of fun. First of all, the party took place in the evening of our last class for this term, needless to mention, the students were mighty relieved and in the mood for some celebration. Secondly, the party was organized just right.
Now I know the ingredients of a great MBA party:
· Superb house wines
· Nice spread of hors d'oeuvres
· Students & faculty with their families
· Semi formal dress.
· A violin & a cello player
· Kids in a separate play pen
It was a great opportunity to socialize, unwind and get set for the holidays!

Did I mention unwind? Well, the past couple of months were a Hectic (with a capital H) period of time for me. We covered three subjects: Management, Micro Economics and Accounting, and by all accounts these were a lot to take in, in such a short period of time. Its too early to tell, how much of all this I will be able to apply in my day to day life (or work), but I am pretty sure that the foundations for some heavyweight stuff (like Finance) have been set. What else did I learn in these first months of my MBA apart from the subjects taught in class? The importance of prioritization (work /school), the value of a new class-network and what great help a supporting spouse can be. (I have pretty much delegated out the tasks of day to day running of a home to my wife: starting from grocery shopping to staying on top of bills to be paid.)
So if I can summarize in a couple of lines the stuff I learned in class in my first 3 months of MBA:
The Management class taught by Prof. Caldwell, taught me a lot about organization design, leadership and all the softer aspects of running an organization.
After Managerial & Financial Accounting class, taught by Prof. Hosseini, I can make some sense of how you can size up a company by looking at its balance sheet and the different rations. In addition what are the various kinds of ‘costs’ that one needs to know to successfully run a company
Economics, taught by Prof Shin, gave me a big picture of the environment in which a company operates. Terms such as supply/demand/price ceilings/subsidy/monopoly …and so on have started making more sense now. The pièce de résistance has to be the ‘game theory’ classes, most intriguing and at the same time a very difficult subject to understand. Well, I think I understand a bit (just a small bit!) of Nash Equilibrium now
Well, now I have to start preparing for the finals in Jan and a couple of papers to submit. So long then…happy holidays!

Classes begin

Well, my classes have started. My first day at class was kind of weird, since here I was going back to school after around 10 years. Facing some of the same challenges that I faced in school, such as figuring out who should be sitting around me, making to the class in time, taking notes and concentrating on the lecture. all in all is a weird feeling of déjà vu.
With job, family and school, I have suddenly realized that there is only so much that I can do. As an example, I have started making some tangible changes in a couple of places. The biggest change is at work, I have reduced, or tried to reduce some of my responsibilities, that meant focus my work responsibilities a bit. I have also cut down on my gym ( read badminton) time. I guess, learning priorities is a big part of doing MBA. The first set of classes had Management, Accounting and Finance. The professors were absolutely fabulous. Completely dedicated and driven.

Students formed a broad mix, lots of disciplines represented different fields of engineering, accounting, finance, medicine/psychology(speech pathology?) and we also have a pilot amongst us!. All students try to participate in the class, some overdo it :-).

Will go through a typical class in more detail later. Have to run now :-)

Orientation

The student orientation (on Aug'25th) was a blast. I had half expected it to be a stodgy affair with lots of Q&As, introductions and academic dos and don’ts. Well, there was some of that, but most notably, they had these team building exercises that completely made my day.

The school had brought in leadership coaches who had us play those games whose purported function is to get us introduced to each other. The cohort was divided into smaller teams and given some papers, scissors, tape (resources); the first challenge was to build the tallest freestanding tower! Next the teams got reshuffled and we were given more resources (eggs & straws). We were asked to build a protective cage that will save the egg when dropped from a person’s height. Needless to say none of the paper towers stood for the required 30 secs in that windy afternoon and the eggs all went splat. But it was a lot of fun.

The final challenge involved the whole WAMBA cohort; the challenge was to deliver a small metallic ball from one point to another using a box full of weird stuff. This one we successfully accomplished, the whole group somehow seemed to deliver and I noticed some clear personality traits. E.g., there were a couple of leaders and some who were the facilitators, some followers and others who just feigned interest. In the end there was the customary debriefing and back to the orientation hall. They served a sumptuous lunch some classy wine and cheese, and I am already looking forward to starting my weekend MBA at SCU.