Wednesday, May 26, 2010

Out of every hundred bucks worth effort that we put in, 75 bucks go to government.

Out of every hundred bucks worth effort that we put in, 75 bucks go to government. Even before we get our salaries, they deduct 35%. When we spend the remaining 65% we have to pay for the sales tax, education cess, higher education cess, import duty, service tax on import duty, tax on transportation, tax on the fuel for transportation, toll tax, tax on water, electricity and consumables used all along the production line and supply chain, professional tax and income tax of the persons involved and other taxes attached with various products like road tax on vehicles and so on.
I am glad that 5% of my 75% is spent on development and on "comman man" in some way or the other and it pains to see where the rest goes.

Monday, May 24, 2010

Change Control Board or Change Management Board

When I heard the term "Change Control Board" for the first time, the immediate impression that it made on my mind was of a group of few old and head strong people standing with a stick, ready to beat anybody who tried to change or bring about any change. In my imagination, at least one of them would look like George Bush in his bad mood.

It has been almost twenty years. I have not just learnt a bit of change management but also taught change management besides leading few considerably big change efforts. However, I still have the same feeling about the name, "Change Control Board."

Control is a process group within the perimeter of management. Whatever methodology you consider, three groups are invariably there, though with different names. The groups are: Planning, Execution and Control. The name change control board either suggests that the board has no say in planning and execution or that planning and execution are subsets of control. Though in very rare cases former could be true, by and large both are wrong. The why not name it "Change Management Board?"

Thursday, March 11, 2010

Do you need a website?

Over past two decades world has changed in a lot of ways and one of the most significant changes is how we think which in turn influences each and every aspect of our lives.

Our buying methodology has changed. We do more research, compare a number of attributes, seek advice from friends and family, accept advice and prefer to buy our trusted brands and products from our trusted place. Interestingly there is no gauge or bench mark for this trust. Neither do we have a well defined list of people, products, brands or companies that we trust. Instead it has got embedded in our subconscious mind and it comes out instantaneously and influences our behavior.

These days, people spend more time online than they do offline. They use internet for communication, collaboration, information, publication, recreation and so many other things. They spend a lot of time on Facebook, Orkut, LinkedIn and a number of similar sites. Your competitors are reaching out to them right where they are and pulling them to their websites. They trust your competitors … Hey! hold on.. you might be wondering why I am presuming you don't have a web presence.. that is because this post is specifically for people who ask, "Do I need a web site?" Sorry for the interruption.. let us continue. Shoppers trust your competitors because they feel that they know them. They have heard about them and they have seen them somewhere on the internet. When they Google for them, they find them. And Google is the biggest advisor that anybody has ever had in the history. (By the way, just try and Google "e-centric" and see what it returns.) Customers trust internet more than they trust themselves. If you don't have an online presence, you do not exist for them. (If you have no passport in Bangkok, you are officially dead!)

People do lot of shopping online and people who make their products available online are either minting money or they are in the incubation phase that precedes the phase where your ecommerce portal becomes your cash cow. Those who say, "Our product is different, it won't sell online," are badly mistaken. The fact is that even those things that could never sell offline find customers online. Right from an aero plane to a safety pin everything is available and everything sells.

Eventually nearly half of the retail market will shift online and rest half will shift to megamalls and retail chains. Half of the commodities and services will sell online and for the rest there will be a fierce competition. By the way do you have any idea how many colleges are offering MBA in Bangalore city alone? Though, every MBA is not going to be a great business man, we have an army of entrepreneurs in the making. At least the retail industry is going to turn into one hell.

Now the bottom line is:

1. Offline you are just not going to have a lot of customers partly because most of them are going to turn online and partly because there are thousands of vendors who are selling exactly what you are. Many of them, very likely, much cheaper than that you are.

2. Online might be too late to start if you do not make a start now. Suppose I can make a website like Facebook and even better than Facebook. Suppose I even have a few million for marketing. Does that guarantee I will even come any close to Facebook. Most likely not, because Facebook has captured the market already and in addition to Facebook there are at least a dozen of sites that are somewhat similar. I am simply too late. I am warning you, "Don't be late." One of my "not so close" friends had the idea of matrimonial sites when there was no Shaadi.com and SimplyMarry.com. But she wasted time thinking "God knows what" and when she finally discovered that the idea was great, she also discovered that the time had gone.

Coming back to the trust part, those who have a strong web presence and online shops are going to see increase in offline sales as well. One of our customers got a lot of wholesale orders from the retail site. Being convinced with their retail site people concluded that they would be equally good in wholesale and bulk orders too. Though they were into distribution too, they had no where mentioned that on the site. It turned out that they did not even need to mention that as they had instead built the trust. Besides wholesale enquiries lot of customers who walked into their retail outlets made it a point to mention that they had found out about then from their website. So, online presence does have a big impact on the offline sales as well.

Today a lot of customers are highly cost conscious. Sometimes they end up wasting dollars attempting to save a penny, but generally they do save money. Though the cost of raw material, labour and everything that goes into manufacturing goods is ever increasing, the retail price of the end products is coming down or at least not increasing proportionally. On one hand we have more efficient and effective processes that save cost an on the other, without any doubts, the margin is shrinking. If a retailer has to make money from his thin margin, he too has to find ways to cut cost. One of the easiest and fastest way is to sell online as the overhead cost goes down, warehouse cost goes down and the human cost goes down.

Your website makes it easier and convenient for you to network. You can link to your principals, suppliers and even customers and get paid for the trust people have in them. If you are selling some leading brand, linking to their site, having their name and logos in your site will go a long way in building your own image. If you can get them to link back to you, nothing like that.

People like to get involved, they like the feeling of being part of something, they like being heard and they love when they see they matter. Your website gives you more chances to make them do that. Besides you can provide a better customer support at much lower cost.

One of the most attractive things about online business is that it a shop that is open 24 hours. 24/7 you are doing sales.

In the end I would warn you against three sets of people:

Set one, the pessimist generalizes, who would give you twenty examples of people who tired online business and failed. Of course if you think you will succeed in the first attempt in everything you do, then online business might be a bit risky. If you are not willing to make another attempt if you fail once, then every business is risky. If you think the only cost is the cost of development and you leave no money for marketing, then too online business is not for you. If you are serious about online business, hire the people who know in and out about the domain.

Set two, the eternal lingers, who would ask you to wait and watch. But.. If you wait, you will never realize when you overstep that threshold that separates those who make it from those who miss it.

Set three, super pessimists. I won't define them, but I will explain with an example. It is a school reunion and Ravi is excited to meet his classmates after a gap of fifteen years. They are discussing what they have achieved or not achieved in their lives. A black Mercedes stops and a gentleman steps out. He is wearing an expensive suit, best known glasses and everything to suggest that he is a very rich man. It takes them more than just a glimpse to realize that it is Sham, their close pal. Later that night Ravi finds an opportunity to ask Sham, "You seem to be doing very well. What is it that you do?" Sham replies, "Are you joking? I am rich because of your brilliant idea. Remember we met three years back on a local train and you told me there was lot of money in Milk business. You told me if I bought one Buffalo and with the money that I earned from selling milk in just one month I could get another. So at the end of one month I would have two, at the end of two months I would have four and so on. That is what I did, I sold my scooter and bought two Buffaloes and after that there was no stopping." Ravi is astonished; he does not utter a word. Sham goes on and asks, "What about you, how many buffaloes did you buy?" Now Ravi was caught between the devil and deep sea, he had to reply. So he said, "I did not but even one. We figured out that the business was too risky and we did not do it." Sham again asked, "But why did you think it was too risky." Ravi replied, "Because my wife asked me a single question. She asked me, what if the first buffalo we buy dies. I had no answer so we concluded it was too risky." Now, online your buffalo won't die, but the super pessimists will find a way to discourage you.

My advice is, make a start ASAP. Hire a consultant and together with him make a roadmap for your online portfolio. Do not expect to win a long drawn war in a single battle. It will take a sustained effort to establish yourself and elevate yourself to a level where the money just keeps gushing in from every side. It is the best choice and there is no second best.