Monday, September 19, 2011

Lesson of a lifetime- How not to run a business!

As the cliche goes and as the experience of our lives make us feel on a regular basis- "The life is full of surprises". We like some of these surprises and we hate some of them but no matter what we feel, they always teach us a new lesson in our lives. It is just like the popular paradox that "Information lies in uncertainty"

Disclaimer: I am going to talk about the company I am working with and since a small post like this could have big implications for the company, I will avoid getting into details and would be using pseudonyms at places.

As you guys know that I work for a big giant company and being a giant, it has both its pros and cons. One which can be classified under either is the uncertainty it throws at you. Till a few months back, I was working with the core business of the company and everything was rosy. No matter senior or junior, every individual is given due respect. Almost everybody believe they are contributing to the company and almost everybody take their job seriously. People seem to know what they are doing and they enjoy doing their work. Well, normal day to day cribbing is of course part of any job but overall people seem to like their job. So that was the story till a few months back and then there was a surprise waiting for me - Transferred to one of the new businesses!! Well very clearly I did not like and still do not like it but these last 2 months have been full of observations and have taught me a lot. It has been a brilliant lesson on how not to run a business!

To put it very bluntly, the current business I am working with is in real bad shape. There is clear lack of leadership and lack of clarity in the role business has to fulfill in overall company's strategy. There is lack of clarity in business objectives, in expectations from employees and even the top management looks lost in disarray. Nobody in the company has any clue on why the business was started, why it is still running and what is the line of thought on the business. Agreed that the purpose of the business may not remain constant over the years and may evolve with time but it is important to have a future vision for the business and to map the same with higher objectives of the organisation. Being a product company, you are expected to know atleast answer to following questions-
What is your product?
What is the proposition that you are trying to sell?
Who is your customer (Target Group)?
What is the potential (gap) in the market that you trying to tap?
What is your technological capability for this product / service?
..(many more)..
And most importantly, Why are you doing this business?

The list of these questions would actually be much longer but the most important of all these, is the last question which asks a very basic question on the intent and expectations of the organisation from the business. Unfortunately the current business doesn't have a clear understanding of this intent. People have tried to do various things over the years to build business strategy but in absence of the clarity, this has only harmed the business more. You can draw a parallel to software development- The quality of software would be much better if the development team understands the requirements from the client before developing than to try to match it to the requirements later in the form of patches. Client here is the top management with business team as development team and software is the business itself. Now since the client doesn't understand and can't articulate his/her requirements properly, the business strategy is made in patches and is not efficient eventually. 

As a result, it opens up a big box of problems for the business- probably bigger than Pandora's. Till some time back, the focus was limited on the business and so were the investments. Although the business is in focus nowadays, lower confidence in business amongst top management has led to very cautious investments. This is always a catch 22 situation as you cannot develop competencies without investments and investments require long term commitments to the business. 

It also suffers a crunch of good human resources and has seen the highest level of attrition against any other business in the organisation. My boss once made a nice comment about a sinking boat in one of his presentations. He asked  if it would make more sense to patch a perpetually sinking ship or to build a new one. Picking from there, I think people do have another option, which is to change and board some other ship and when people chose this option it creates further problems with the business as now remaining ones are not sufficient enough to build  a new boat. Despite assurances from top management, people will tend to chose changing boat option as they already have lost faith in top management. 
A classical case of game theory- Person who leaves improves his payoff; Person who stays loses; If all leave, boat sinks and new boat doesn't get built (Organisational objective fails). If all stay, boat gets built but then others have run far ahead by the time your boat is ready. So to maximise their returns, everybody tries to leave and in doing so, the organisational objective doesn't get met.

Managers are too scared to take any business decisions fearing that any mistake might just fall onto them in future. Whole business has gone into a defensive mode and it is just about passing on blame to others for all the failures than to look into ways to improve and correct the wrongs. We have to realise the fact that at the time of establishing a new business, there has to be some tolerance for the mistakes because if you are not making any mistakes than may be you are not exploiting potential good enough. Moreover, the business being a new business, employees are not even the experts in true sense and they will make certain mistakes in the process. 

No offense to the business manager, but I also see a negative approach towards marketing in this place. People see marketing as some kind of magic which can cover for all your inefficiencies and in-capabilities. What these guys fail to understand is that there are some basic requirements any marketing team has- 1) To have a product to sell (Consistency) 2) Strong manufacturing and back-end (Production/Operational capabilities) and 3) Directions on selling strategy (Business Objective).
Unfortunately all the three seem to be missing here!!
It seems like these people are still living in the stone age of marketing - "Production Approach". Just to quote   from a discussion with one of the customers recently- The customer had a requirement of higher shelf life of the product than we were offering and the business manager was talking about uselessness of the marketing team if the product could not be sold off within the stipulated life of the product. Customer's comments about consumer preferences were discarded outrightly on account of food safety and blah blah.. I wanted to speak out and clear it up with business manager but obviously you cannot do that in front of a customer. I felt so helpless.
To put it into perspective, we cannot even blame business manager for this naive argument as he has worked throughout his life in a monopolistic business where market is defined by the company itself and marketing has had limited role to play. The problem is that he sees this new business through the same lens.

Interestingly, people currently running the business are skeptic of the business restructuring team, thereby creating a hostile environment in the company. So many times, the business team has been asked not to interact much with the restructuring team and there have been instances of people getting treatments for showing up in related meetings. Well, one thing is absolutely clear - With the current state of affairs, the business is not going anywhere and also, with current state of affairs, there is no rationale to keep the business running. However, there are some brilliant ideas on which we are working at currently and if any of those clicks, it would be a new beginning for this business and it might just redefine the industry as well (Touch wood).

Keeping the fingers crossed. It is either gonna be big or a wrap.

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