Google and Open Systems

Google’s SVP-Product Management Jonathan Rosenberg has published a manifesto explaining Google’s commitment to open systems. The post — otherwise a paean to the virtues of openness — contains a crucial caveat about the proprietary platforms that provide 99% of Google’s revenue. Rosenberg says:
While we are committed to opening the code for our developer tools, not all Google products are open source. Our goal is to keep the Internet open, which promotes choice and competition and keeps users and developers from getting locked in. In many cases, most notably our search and ads products, opening up the code would not contribute to these goals and would actually hurt users. The search and advertising markets are already highly competitive with very low switching costs, so users and advertisers already have plenty of choice and are not locked in.
So, search and related ad markets are highly competitive. Really? To echo Rosenberg’s point about the definition of open, competitive is “a Rashomon-like term: highly subjective and vitally important.” Many antitrust economists would balk at describing a market with just two players as highly competitive. That aside, Rosenberg’s analysis brings to mind the browser business in 2000, when Internet Explorer and Netscape had 80% and 20% market shares, respectively. That market was also “highly competitive with very low switching costs.” By Rosenberg’s logic, there was no need for an open source browser.
Has Rosenberg given us reliable rules for when it makes sense to open a platform? Chris Dixon doesn’t think so. He sees Google’s “closed core” strategy as a classic case of a platform owner seeking to commoditize complement providers and thereby extract more rent from its ecosystem.

I have two additional observations about the post:
  • Rosenberg’s claim that MBAs don’t learn about the merits of open systems is wrong.
  • His call for a clear and precise definition of open is on target.
Open Systems and MBAs. Rosenberg asserts that open systems are counter-intuitive for traditionally-trained MBAs, who are “taught to generate a sustainable competitive advantage by creating a closed system, making it popular then milking it … [seeking to] lock in customers to lock out competitors.” He promises that Google’s strategies for open systems will “rewrite the MBA curriculum for the next several decades.”


I hope so. I make my living teaching MBAs about platforms, and in the spirit of openness, I welcome new ideas from Google. However, I take exception to Rosenberg’s assertion that MBAs don’t learn about the merits of open systems. This topic wasn’t covered when Rosenberg got his MBA in 1985, but most business schools now have courses that examine open platforms and open innovation (for example, at Harvard Business School: Managing Networked Businesses, Strategy & Technology, Competing with Social Networks, and Managing Innovation). Scholars have learned a lot about the merits and drawbacks of open platforms. My working paper with Geoff Parker and Marshall Van Alstyne, "Opening Platforms: How, When and Why?" summarizes some of this thinking.

Defining “Open.” Rosenberg says “in our industry there is no clear definition of what open really means.” I agree and would add that in classifying a platform as open or closed, it’s vital to specify which platform layer is being referenced. Conversations about open systems often get confusing because open source and open APIs refer to fundamentally different platform layers. The following excerpt from my working paper with Parker and Van Alstyne expands upon these points.
A platform is “open” to the extent that: 1) no restrictions are placed on participation in its development, commercialization or use; or 2) any restrictions—for example, requirements to conform with technical standards or pay licensing fees—are reasonable and non-discriminatory, that is, they are applied uniformly to all potential platform participants.
Platform-mediated networks encompass several distinct roles, including: 1) demand-side platform users, commonly called “end users”; 2) supply-side platform users, who offer complements employed by demand-side users in tandem with the core platform; 3) platform providers, who serve as users’ primary point of contact with the platform; and 4) platform sponsors, who exercise property rights and are responsible for determining who may participate in a platform-mediated network and for developing its technology. For a given platform, each of these roles may be open or closed.
The Linux platform, for example, is open with respect to all four roles. Any organization or individual can use Linux (demand-side user role). Likewise, any party can offer a Linux-compatible software application (supply-side user role). Any party can bundle the Linux operating system (OS) with server or personal computer hardware (platform provider role). Finally, any party can contribute improvements to the Linux OS, subject to the rules of the open source community that maintains the OS kernel (platform sponsor role).
By contrast, Apple’s iPhone is closed with respect to all four roles. In the U.S., only AT&T Wireless subscribers can use an iPhone. To buy one, other mobile carriers’ customers must switch to AT&T, incurring inconveniences and contract termination fees (demand-side user role). Software applications for the iPhone are only available through Apple’s iTunes Store. Apple reserves the right to reject third-party applications due to quality or strategic concerns, and often does so (supply-side user role). Finally, only Apple manufactures and distributes the iPhone (platform provider role) and Apple is solely responsible for the iPhone’s technology (platform sponsor role) 
Between these extremes, we find platforms that mix open and closed roles in different patterns (see figure above). For instance, Microsoft’s Windows platform is closed at the sponsor level but open with respect to other roles. Apple’s Macintosh platform is closed at the sponsor and provider levels but open with respect to both user roles. Since all of the platforms in the figure are successful, it should be clear that without careful definitions, we cannot make general statements about the attractiveness of open versus closed platform strategies—notwithstanding enthusiasm about the profusion of open source software and content created in collaborative communities like Wikipedia’s.

The Fittest don’t Survive

IN THE PRESENT SCENARIO IT’S NOT THE FITTEST THAT SURVIVE. INSTEAD THAT GLORY IS RESERVED FOR THE “ADAPTABLE”. IF YOU ADAPT, YOU CAN ‘FIT’ IN ANY ENVIRONMENT & SURVIVE

“GO ON BE A TIGER” proclaimed the tagline of Accenture - said to be the largest consulting firm in the world with more than 1,86,000 employees and branches in 52 countries, with 96 of the Fortune Global 100 companies as its clients. The advertising campaign was seen as a perfect fit between the celebrity (Woods) and the client (Accenture). Tiger Woods was known world over for his strength, mastery, discipline and relentless focus on winning – much similar to Accenture and its business performance. This was 2003. Last month the tagline took on a whole new meaning when the world came to know about Tiger Woods’ frolic with porn stars. On the night of 13th December 2009, Accenture become the first company to drop Tiger Woods from its multi million dollar endorsement deal. For a company that for years had built its whole advertising campaign around this one man – the move was a strong indicator of how Wood’s popularity had sunk.

Tiger Woods surely knows what it feels like to hit rock-bottom. From being a cynosure of all eyes, the perfect celebrity endorser has become a toxic taboo subject overnight. So has Woods outlived his utility for the brands which he endorses? Moreover, is it time to rethink the celebrity endorsement industry as a whole? Well, the correct answers to these questions are still not clear. What is clearly emerging however is the impermanence of it all. Someone whom the media (and the rest of the world) called the epitome of success was labeled a “loser” in a jiffy. Herein lies the secret of real success. As Winston Churchill once said “success in not final, failure is not fatal, it is the courage to continue that counts.” The world will be watching Woods and how he continues after his fall.

FALL – YOU WILL
The road to success is long and difficult, but if you are determined to succeed and if every part of your being longs for that, then there is no one who can stop you from succeeding. If you have the courage to follow your heart and know what you truly want to become, everything else becomes secondary and every step you take will bring you closer to success. However, with success come great responsibilities and with success also comes undisputed failure. A truly successful company or individual is one who knows how to manage his success and failures equally well. There is no law of nature that states that the most powerful will inevitably remain at the top. Almost everybody faces a fall. But then success is what Nelson Mandela said: “The greatest glory in living lies not in never falling, but in rising every time we fall.” It is true for individuals, for corporations and even for kingdoms and empires.

Look at some of the greatest companies. Apart from their ‘greatness’ as a common denominator, they also have one more thing in common – each one of them have taken at least one tremendous fall at some point in time, but found a way to recover. Be it IBM, Disney, Boeing or Xerox, each of them have stumbled but have refused to give up. Each crisis has only taught them some new lessons in leadership.

The reason for fall may be different for different companies. As Leo Tolstoy very rightly quoted in his book Anna Karenina: “All happy families are alike, each unhappy family is unhappy in its own way.” Merck, for example, faltered because it became obsessed with growth. It grew so fast that it was not able to find the right people to sustain this sudden spurt in growth. Much like the Roman empire, which once seemed invincible and indestructible under Julius Caesar. But according to some historians, it was the empire’s rapid growth that caused its eventual demise. Its colossal size made it near impossible to manage and protect.

IBM fell in 1980’s when its top leaders refused to accept that times were changing and new companies and products were slowly edging it out. Scott Paper thought it was the best in making paper towels and no one could touch it. Companies like P&G and Kimberly Clark came out with products that attacked Scott Paper and still the company refused to acknowledge that things were going wrong. The result: from being the most successful and commanding company in paper-based consumer products, the company went into total oblivion. It didn’t take its competitors seriously.

That’s something Kalanithi Maran, India’s undisputed leader of regional broadcasting never overlooked. “I don’t take competition lightly,” he said. When everyone (including Zee Network) rejected his proposal of starting a regional channel, the man believed in himself and went on to start SUN TV Networks. Today, his collections of 20 satellite channels and 46 FM radio stations have helped him dethrone Zee and become India’s most valuable listed media company with a market capitalisation of $3 billion. If Zee wants to hold on to the top place, it needs to be careful not to go the route IBM traveled in the 80’s. IBM needed a great leader like Louis Gerstner Jr. to pull the sinking company back into form and his book ‘Who says Elephants can’t Dance’ showed how when everyone suggested he break up the giant, the man slowly infused life back into it and showed the world that even elephants are manageable!

THE DINO BLUNDER
An old adage goes that it’s all about the survival of the fittest. But when you look at dinosaurs, the adage is proved wrong. Fittest means in ‘best physical shape’ which is what the dinos were in. But as in business, so in nature it’s not the strongest of the species that survives, nor the most intelligent, but one that is most adaptable to change. Survival is a choice, an option. You decide to adapt, you survive. Madonna, adapted and changed and today she still tops the charts. Big B changed from the ‘angry young man’ to PAA and just look at the man today.

If corporates want to survive, they need to change too. They need to adapt with changing times and not make the same blunder that the dinos made. An interesting study by Aries De Geus reveals that average Fortune 500 corporations survive for less than 50 years, while special corporations like Nokia survived for centuries. The difference was in the attitude, in the way they looked at success. For these hardy survivors the sole purpose of an organisation was not just to make money, but make a difference to the world they were living in; not to look after Wall Street, but after their people; not to just help their employees make money, but to make a ‘life’. This was how they defined success and every time they failed these are the thoughts that brought them back from the brink and helped them survive not just for a few years, but centuries. These corporations were ‘living organisations’.

So as we ready for the New Year, let us make a choice. Let’s redefine what corporates are meant to do, let’s redefine leadership and in the process, let’s build ‘living organisations’ that would not perish with one fall but would rise again and again and again. After all, we do know that survival is a choice and it is not always the fittest that survive...

Pitching

Last week, one of my students shared the pitch deck for his startup. His ideas were great – he’d come a long way in a couple of months – but I was also struck by the quality of his presentation. The text was sparse, the fonts and colors were attractive, and the design was simple and elegant without drawing attention to itself. I was surprised, because most of my students — trained at consulting firms and investment banks before arriving at Harvard Business School — produce over-complicated and unappealing PowerPoint decks. Unfortunately, at HBS, we teach our students nothing about how to create and deliver a great presentation.

I said, “You did this on Keynote, right?” He acknowledged using Apple’s presentation software. I said, “This is very good, but you can make it even better. Track down the presentation that Matthew Prince and Michelle Zatlyn delivered when their startup, CloudFlare, won last year’s HBS Business Plan Contest. It’s the best I’ve ever seen, and I think it was a big factor behind their success. You can learn from it.”

Matthew shared the presentation, along with some good advice. Here’s his email to my student:

I've attached the printed version of our Business Plan Contest presentation. This is the version that judges had in their hands while we presented. It is a reflection of, but different than, what we actually projected on the big screen while we talked. A few points:

1. The presentation itself is important, but energy and comfort are the real keys. What I think really came across in our presentation for the Business Plan Contest was that Michelle and I were having fun, we were comfortable public speakers, and we had a real enthusiasm for what we were doing. Great slides help, but they can’t replace these crucial ingredients.

2. Recognize that the printed page and projected screen are different media and should be treated as such. For our presentation for the Business Plan Contest we only had 20 slides in the printed version and maybe 60+ in the projected version. For example, the printed deck may have a list with 6 bullet points where the projected version would have a slide for each bullet. While not everyone will agree, for a projected presentation to an audience, I'm a big believer in a lot of slides, with little content on each slide, big fonts, and the whole thing rolling by almost as fast as I can advance my remote. If I use transitions at all, I turn down their play time to a fraction of a second — significantly below the default. I think this all helps ramp up the energy and excitement levels.

3. You want your audience watching you, not your slides. Your presentation is what you’re saying, your slides are there to help emphasize the key points and make sure your audience is following you. For example, my favorite slides often have one word on them, like "MARKET." They serve primarily as a cue to you and your audience as to what’s coming next. Slides should never be so complicated that someone is squinting to decipher them. Instead, they should serve as chapter headings to help the audience focus on what you're saying.

4. PowerPoint makes ugly presentations. Period. If you want great slides get a Mac and buy Keynote. We actually had a VC at the Business Plan Contest say, "Well, I'm not sure about the business, but I'm 100% convinced that I need to get a Mac before I ever do another presentation." At CloudFlare we use PowerPoint for things that will primarily be printed. Anything that’s going to be displayed on a screen to an audience of more than 6 people we build in Keynote.

5. Use the technology to look smooth. For example, both Keynote and Powerpoint let the display on your laptop — but not on the main screen — show both the slide you're on and what’s coming next. I’m amazed that everyone doesn’t use this because it is so helpful. Being able to see what is next up and talk to a transition that makes sense really helps the flow. It helps you look extremely practiced even when you just finished the presentation a few second before you’re giving it.

6. Watch great presenters, especially great product demos, TED talks, and Steve Jobs's keynotes. I like this Larry Lessig talk on copyright:

http://randomfoo.net/oscon/2002/lessig/free.html

In that video you don't see Larry speaking but you do see how he uses very simple slides to help signpost the complicated concepts he’s talking about. What you don't see are any bullet-point lists with tons of text.

7. Finally, know your audience and be careful about going too far. You can take this advice and put together a terrible presentation that will come across as gimmicky. For example, while I think the Lessig talk linked to above is great, I watched him give it at a highly technical conference where it just didn’t work. The audience grumbled about how thin the slides were and how the talk contained almost no real information. A presentation has got to be aware of its purpose, which is defined by its audience, and it must clearly serve that purpose. It has to feel comfortable. And, most of all, you have to feel really comfortable when you're giving it.

Good luck!

I’m no expert in this area — I have a lot to learn myself about designing and delivering presentations. Books that have proved helpful include Presentation Zen by Garr Reynolds, Art of the Start by Guy Kawasaki, and Confessions of a Public Speaker by Scott Berkun. I hope that readers will share other recommendations.

Addendum, Dec. 23: Phil Michaelson, founder/CEO of KartMe offers a terrific set of pitch tips. He makes the case for presenting without Powerpoint and building energy by featuring the product.

Jan 3: Carmine Gallo's slide show on the Presentation Secrets of Steve Jobs is also superb.

WAKE-UP WAL-MART!

KNOWLEDGE ABOUT CULTURAL NUANCES AND ETIQUETTES GOES A LONG WAY IN ENSURING THE SUCCESS OF YOUR BUSINESS ON FOREIGN SHORES AND IN AVOIDING SURE-SHOT FAILURE.

Women don’t wear pants in Japan! Now before your imagination runs riot, let me tell you this is one of the guidelines prescribed to many female business travellers to Japan. As per Google, “Japanese business etiquette” is one of the most searched for Japan business related keywords. According to these guidelines, Japanese men do not relate easily to women with authority in business and that can cause problems while doing business. The Japanese culture encourages women to wear long skirt suits to work. Most Japanese companies prefer that their female employees not wear high-heeled shoes as Japanese men are not very tall, and towering over them might offend some.

While “Going Dutch” is a culture common to Netherlands and accepted in many other cultures, the Turks don’t believe in “Going Dutch” at all, and a suggestion to that effect may not be appreciated much.

The head is considered a sacred place and nobody in Singapore appreciates it if you fondly pat a child on his head. In India, it’s a way of showing affection – not there.

Each country comes with its unique cultural nuances, and as a business traveller, it’s of utmost importance that one remains sensitive to these seemingly small irrelevant details. They will help you strengthen your bonds with your foreign partner and help you do business better. Though it might not in any way affect your balance sheets but it helps to understand your counterpart better when you know that sitting cross-legged in Singapore may be considered offensive, or that Germans consider a weak handshake as a signal that you are insecure and not convinced of your abilities, or that in Israel (due to years of fighting) men prefer to sit with their legs slightly apart and upper body leaning forward (akin to a position where they are ready to get up at a moment’s notice), or that in Switzerland, before starting a conversation, it’s important to shake hands with everyone – including children. While Arabs consider it a show of trust and solidarity when they put their arms around you and hold your hand with both their hands, doing the same in Germany could be one of the biggest etiquette blunders one could make. Germans avoid physical contact and placing your hand on someone’s’ shoulder could make you appear too authoritative and not appreciated. Knowledge about the etiquettes of other cultures is becoming very vital as it could as well be a deciding factor in whether you succeed in that country or not.

ACROSS THE SEAS
Yes, gone are the days when simply understanding your own country’s business environment well was enough to succeed. Today, if you really want to make it big, you need to stretch out, go beyond the boundaries and learn to do business in strange, foreign cultures. Ratan Tata, during his 18-year tenure as Chairman of the Tata Group, ensured that his company expanded internationally – a strategy that India’s other business houses copied and are still trying. Today, the Tatas have annual revenue of about $70 billion – that’s great, but what’s of significance is that 65% of the group’s sales are derived from outside India. If you really want to grow big, you not only need to expand but also need to have a global mind-set too.

WHEN YOU DON’T THINK GLOBAL
This company’s revenues are more than the GDP of at least 144 nations, and today, it’s the world’s second largest company – yes, you guessed it right, it’s the retailing giant Wal-Mart! It’s an organisation that’s been super successful in America. As someone once said, “If you want to reach the Christian population on Sunday, you do it from the church pulpit. If you want to reach them on Saturday, you do it in Wal-Mart.” There is hardly any American who has not shopped at least once in Wal-Mart. That’s the power and reach of this retailer.

Yet, when it comes to going global, this is one company that has committed some very costly mistakes, for it failed to understand he local culture.

In Mexico, Wal-Mart started its stores and set up huge parking lots. Little did it realise that what was considered as a “facility” had no meaning for Mexicans as most came to the outlets in buses. It entered China in 1997 and in spite of doing business in the country for more than 12 years, the company has still not made a profit – it definitely has failed to understand the Chinese market. It tried to bulldoze its American styles into the Chinese market; a move that failed as expected. Selling golf balls in a low-income country like Mexico was as wrong as selling meat, neatly packaged in Styrofoam and cellophane to Chinese customers. A country where consumers insist on live fishes in grocery stores and on killing them in front of their eyes, packaged meat was looked upon as stale food and did not sell – despite being correctly priced and being of good quality.

Wal-Mart tried to export its American consumer culture to the world. Even its ‘Everyday Low Prices’ strategy failed and did not pass muster against the cultural preferences of consumers. No wonder it beat a hasty and costly retreat from Indonesia, South Korea and Germany. It’s not always a good idea to retain your individuality and be rigid. It pays to be flexible and Wal-Mart learnt it after incurring billiondollar losses. Today, the Wal-Mart of China keeps live fishes and turtles in its stores; it stacks up on diapers in the ‘Year of the Monkey’, which is considered a lucky year to bear children. It’s slowly learning to woo the Chinese shoppers

Wal-Mart seems to have found its footing in India too. It’s realised the importance of understanding the people and their culture before trying to sell its goods. So the first thing it did was to look for a man who understood the Indian consumer to head its Indian operations. It understood first what the Indian people wanted, studied the local kirana shops, understood which paneer sells where, and also realized jhadoos where more important to Indian households than vacuum cleaners! With 50% of Wal-Mart’s assets outside USA, it was high time Wal-Mart woke up from its stupor and realised that every market is not like its American one. Under Mike Duke – the new CEO of Wal-Mart – things seem to be looking up.

You too should know how important it is to understand the different cultures. Don’t commit mistakes like Wal-Mart. As Jawaharlal Nehru said, “Culture is the widening of the mind and of the spirit.” Widen your horizons too. If you don’t want to fail, don’t do what Wal-Mart did in the various countries. You will learn all your lessons in culture through one exercise – keeping an eye on Wal-Mart goof ups. So keep watching Wal-Mart.


A Compilation of the Web's Best Advice for Entrepreneurs

Below, I link to blog posts and other online resources that offer advice for entrepreneurs. My selections are tailored for consumer Internet startups, but should be helpful to teams in other sectors. There’s a lot of information here, so don’t try to digest everything in one session. I'll update this post periodically (and mark additional links as NEW), so please share suggestions via comments, email, or Twitter.

Key Factors for Startup Success

Personal Motivations and the Entrepreneurial Lifestyle

Startup Management Practices
Team Issues
Fundraising
Startup Marketing

Product Development
Other Resources
  • The HBS Rock Center has compiled a list of resources for entrepreneurs on a range of topics, including developing a business plan, fundraising, legal issues, finding a team, etc.
  • The Stanford Technology Ventures Program has a terrific library of audio and video podcasts of presentations by entrepreneurs and venture capitalists
  • Jason Calacanis hosts the weekly podcast, This Week in Startups, which features interviews with entrepreneurs and VCs
  • List of monthly "Starting Up" columns from Boston Business Journal covering many of topics above by Joseph Hadzima of MIT Sloan School and Main Street Partners (NEW 11/30)
  • Podcasts with entrepreneurs and VCs from Highland Capital (NEW 12/1)



WHO’S NEXT?

FINDING THE RIGHT SUCCESSOR TO PASS-ON THE CEO’S BATON IS ONE OF THE MOST CRITICAL STRATEGIC DECISIONS THAT A COMPANY SHOULD TAKE... MUCH BEFORE THE CEO IS ACTUALLY READY TO ‘PASS IT ON’.

He’s finally back in business (thank God for that!). Fortune magazine has named him ‘CEO of the Decade’ this month. He is the perfect choice and there can be no one better, for this man has single handedly redefined mobile communication (with the iPhone), made the geeky PC hip-n-happening (with the Mac- Book) and brought back Apple from the brink. Steve Jobs is a man whose products inspire a religious devotion in users – and he is worshipped by many around the world. But this is where the problem lies. Early this year when Steve Jobs took a leave of absence from his company to get a liver transplant, Apple’s stock slid to an all time low. It’s said that when Jobs sneezes, Apple catches a cold. If a company is all about a great personality and a not a great product there’s going to be a big problem of survival

Till recently, Apple was synonymous with Jobs. Not so much now and thankfully so. Without Jobs at the helm, Apple surprised Wall Street with its Q2 profits which showed the world that – yes Steve had shown the way, but the company was in safe hands without him too (under Tim Cook). Steve was back in September and got a standing ovation from the audience, not so much for the new iTunes software and new line of iPod Nano music player with video cameras, but for being the greatest icon of corporate world. Yes, the wizard is positively back but has ensured that Apple is definitely not just about its founder’s charisma, but about computers and others things – in which they are the best. Tim Cook seems to be the right choice for successor and Apple is apparently in safe hands.

When the man at the helm of affairs is a living legend and one of the richest persons in the world, finding the right successor gets a bit difficult. However, when you are a smart investor like Warren Buffett, you don’t just have one but four potential successors to choose from. For more than four decades, the man has been nurturing his firm Berkshire Hathaway, making it America’s sixth-largest company by market value. Choosing the next Buffett is as important for Berkshire as it is for America. Buffett at 77 is aware that the one question hanging on everyone’s mind is – who’s next? He knows and understands the sentiments and jokes that he has built Berkshire so that it could be run by a cardboard cutout or the bust of Benjamin Franklin. When a company is performing well, who its successor is going to be, becomes all the more important. And with Warren’s good planning, everyone’s optimistic that whoever the successor – Ajit Jain, David Skoll, Joseph Brandon or Tony Nicely – America’s most famous investor, the so-called Oracle of Omaha, will find the right guy as his successor.

GREAT IS NOT ENOUGH
When Jack Welch became General Electric’s CEO in 1981, the company was worth $14 billion and when he retired 20 year later, GE’s value had touched $500 billion. This was fabulous, but true success lies in the ultimate test: once the leader is gone, does the company continue to flourish? The most important job a CEO does is not just keep the balance sheets looking good, but finding the next man who can take the company forward. Jack Welch says, the most important business decision he took was selecting his successor. At GE, CEOs have the ‘airplane’ question that help them identify the next man. Imagine you are flying in one of the company planes and the plane crashes. Who would be the next chairman of GE? This simple question helped GE identify Jeff Immelt as successor for its top job. As Jim Collins discovered while writing his book ‘Good to Great’ – it’s getting the right people in the right job which is more important than strategy. Getting the right person for the most important post in the organization (that of the CEO) seems to be a leader’s most important task.

Back in the 1970s, American car giant Chrysler was losing money and faced bankruptcy. Its new CEO Lee Iacocca convinced the government to provide a $1.5 billion bail out loan. Soon this maverick turned around the company and made it profitable. Not just that, he returned the government loan seven years early. This grand-old-dad of business became America’s favourite straight talking leadership guru. His famous slogan “If you can find a better car, buy it” became a super hit. This business rock star retired from Chrysler in 1993. Today, Chrysler is bankrupt again. In May, President Obama announced a plan for Chrysler to file for bankruptcy - this time there was no knight in shining armour to save the company. Iacocca did a great job but sadly it was not enough to save the company.

A wrong successor can ruin even a great empire. History is proof that incapable kings and emperors have ruined everything their predecessors built. The extremely capable and intelligent Akbar, the greatest of Mughal emperors, was able to conquer and control all of northern and parts of central India. When he died, the empire extended from Afghanistan to the Bay of Bengal and southward to the Northern Deccan. But just making a grand empire was not enough. A series of weak successors and everything Akbar created was ruined when Aurangzeb took over the throne. Sometimes just keeping it all in the family may not prove to be a good idea.

HOMEGROWN OR NOT?
Who to choose as your successor may prove to be a tough question to answer. Succession planning needs to be done intelligently. It’s a slow process and a difficult one too. Nine years before his anticipated retirement, Welch said, “Choosing my successor is the most important decision I’ll make from now on. It occupies considerable amount of thought almost every day.” That’s what we call ‘visionary leaders’. And it’s these leaders who choose their successor from within the organization. ‘Home grown CEOs’ is the key word to successful succession planning. In the 1900s, Colgate and P&G were at par with each other, but by the 1940’s, Colgate had fallen to less than half the size of P&G. The reason? Poor succession planning. If you need to depend on some outsider to take your company forward it may be a wrong choice. All great CEOs have started their careers within the organization – no wonder they understand it the best. Jack Welch joined GE in 1960 as a junior engineer; Mike Eskew, the erstwhile CEO of UPS, the world’s largest package delivery company, started his career in 1972 in UPS as an industrial engineering manager. Under him, UPS saw unprecedented growth with revenues growing by nearly 57%. Not just that, its international package revenues more than doubled and its supply chain and freight revenues quadrupled. Contrast this to Carly Fiorina who joined Hewlett-Packard in 1999 as its CEO, becoming the first woman to lead a Fortune 20 company. Her decision to merge Compaq with HP led to her downfall and in 2005 she was forced out of HP. Dynamic, articulate and powerful, Fiorina had seemed the ideal choice. The media loved her and she adorned the covers of most business magazines. Yet, these may not be the right criteria for choosing a true leader. As Ram Charan states in his book ‘Execution’, most people assume that a great leader is one with vision, is articulate and can inspire. They forget the most important question: How good is this person at getting things done in the right manner? Do they set adrenaline pumping goals and energize the whole team to achieve these goals? Do others enjoy working with him? If the answer to the above questions is ‘Yes’ then you have found your man. Most of the time he/ she will be a person who started his career in your organization.

CREATING THE CULTURE
A successful business is one that not only has great management and an excellent business model, but also a great culture to hold the two together. To keep the culture one needs highly able managers who understand the company values and its business models. At Berkshire Hathaway, each of Buffett’s hand-picked successors are trained to run the business just the way he would. Many companies fail to do this and then need to rush back to their founders to be able to survive. Howard Schultz was brought back to help Starbucks survive the slowdown. Toyota is looking up to Akio Toyoda, the 53 year old grandson of the company’s founder, to help the company recover. For the first time in 14 years, Toyota is turning to its roots for leadership to help it tackle its worst crisis. Our country looked up to Sonia Gandhi to help the country and provide it the right leadership. Let that not happen to you.

Some of the world’s most admired companies are now being headed by new CEOs or are on the look out for new leaders. Ratan Tata too is looking for his successor and he has two years to find the right man. The fate of India’s most respected business will rest on those hands. P&G is replacing its longtime CEO A.G.Laffley with the 29-year-old company veteran Robert Mcdonald; Wal mart has a new CEO Mike Duke who replaced Lee Scott – a man who spent 30 years in the company. Next year, Douglas R. Oberhelman would look after Caterpillar and Bank of America too will have a new head in place. All these companies feature in Fortune’s list of most admired companies. Would they continue to remain so is what we need to see. If the successors are chosen carefully, these companies would continue to prosper. So if you want to build a great company, invest in a great successor. Just doing a great job is not enough. You need to ask yourself daily: Who’s next?

Get OUT GET NOTICED

THE ONE WHO CAN PUT HIS FOOT OUT OF THE DOOR, IS THE ONE MOST LIKELY TO SUCCEED. EVEN IN TODAY’S WIRED WORLD, DON’T UNDERESTIMATE THE POWER OF THE PERSONAL TOUCH. SO GO ON, AN. NOUNCE YOUR PRESENCE...

This is the story of a simple woman, a story of an Indian girl, born into a conservative family in Chennai, who went to the US to pursue higher studies and who while studying also worked as a receptionist from midnight to sunrise to earn money. Finally, after a lot of hardships she passed out from Yale University and got her first call for a job interview. She struggled hard and somehow managed to scrape together $50 to buy herself a western suit. Not having much idea about western wear, she landed up for the interview wearing a trouser that barely reached her ankles. She was rejected. Dejected and disheartened she turned to her professor at Yale for help, support and advice, and she got the simplest, yet best possible advice – “Be Yourself”. She wore a sari for her next interview and got the job. Today, Fortune ranks her as the most powerful woman in US business.

Yes, you guessed it – she is Indra Nooyi, Chairman and CEO, PepsiCo. And the Indiaborn Nooyi has been named as the most powerful woman in the US business for four straight years now. This Queen of the business world, and my personal favourite, has shown the world how if you need to survive you need to change; you need to adapt and reinvent yourself. Today, if she continues to sit pretty at the top spot, it is because she has consistently changed and reinvented herself, in tune with the times. Her secret – “being visible”. According to her, people need to know that their CEO cares about them and has a realistic vision. She feels the need to see and be seen. After becoming CEO, Nooyi’s goal was to visit 80 countries in her first five years as CEO so that she could see and also be seen. This strategy seems to be working for her. It was during her visit to China that she saw the resurgent trend of people eating according to traditional Chinese medicine. She immediately knew she had to find ways to incorporate Chinese medicine into Pepsi- Co’s products. China is such a huge market after all and one could not ignore it at any cost. Clearly, just ‘being there’ can work wonders for you and your organisation and help you choose the right path.

GET OUT, GET NOTICED
It is a highly wired world that we are living in today. Technology is doing all it can to help you stay connected. Be it SMS or e-mails, or Facebook, or LinkedIn, or the latest craze – Twitter – all these have made ‘staying-in-touch’ easier. Yet, while searching for excellence decades ago, Tom Peters and Bob Waterman discovered a very simple and effective trick that great leaders and companies put into use extensively to manage people and work. They called it MBWA – Management by Wandering Around. The strength of an organisation lies in its informal communications. One needs to know who they work with, what drives them, what their passions are, what are their fears, their dreams – everything. You need to stay “intimately in touch,” says Tom Peters, “if you want to manage well.” E-mails, Twitter and others of their ilk fail here.

In 2004, Peters was asked to give a talk to retailers. He talked to experts, searched the web and prepared a beautiful speech. But it took merely two hours of wandering in and out of shops, for Peters to scrap this speech and write a better one. Those two hours helped him understand the retail environment better. His advice – get out of your cubical. The ability to go out and talk and understand is the most important skill. If you are just relying on e-mail, it’s time you stopped and pondered on the importance of human-touch. Excellent companies are a vast network of informal, open communication, which is only possible when there is an environment of trust. Walk around to build that environment. When people see you, they will know you better and trust you more.

‘GET OUT GET NOTICED’ ...YET AGAIN
If you need to be visible to be successful, then the same applies to your brand too. You need to make sure your products are ‘visible’. How do you make your brand visible, is the moot question. Branding, after all, is a pivotal task for any company – some work out extensive advertising campaigns, while some use expensive celebrities to attract attention. Some others, however, take a different path.

In 2005, Nestle entered into a partnership with Coca-Cola. According to an agreement, Nestle could sell its Nescafe products through the world’s largest beverage makers’ vending machines and sales outlets. Suddenly Nestlé’s products were more visible and as expected in a few months, Nescafe’s market share, as well as sales revenues, increased drastically. Coca- Cola, on the other hand, used McDonald’s to increase its visibility. If McDonald’s sells Pepsi Cola instead of Coca-Cola, it would not take long for Pepsi to defeat Coke!

Lenovo too knew it had to be ‘visible’ to be seen as a successful company by the world. It went ahead and bought IBM’s PC business in 2005 and changed its image instantly. Now it was perceived as a “global brand” as opposed to a Chinese brand – because it used IBM’s distribution network to make itself visible and hence available world over. When Coca Cola abandoned its Indian operations in the 70’s, Ramesh and Prakash Chauhan decided to fill the void by launching Thums Up, with the punch line ‘Happy days are here again’. People loved it and the company soon set its cash registers ringing.

Ironically, it was the same Thums Up that Coca Cola acquired for a meager $60 million to get a one up on competition. Buying Thums Up also meant buying its distribution network and overnight Coca Cola was visible everywhere in India. Not just this, Coca Cola worked hard on its supply chain to cater to India’s vast rural market. It increased its ‘visibility’ like no other beverage company had done before and the strategy paid off. Today, rural markets account for almost 80% of new Coke drinkers and 30% of its total volumes.

This is a trick that Coke learnt from its senior – Hindustan Lever Limited – which entered India years ago and had mastered the art of being visible. In 2002, Sanjeev Gupta, Coca-Cola’s Deputy President said, “We want to be the Hindustan Lever Limited of the Indian beverage business.” Look carefully and you realise that it’s HUL’s fantastic distribution network that has prevented any competitor from even coming close to this FMCG giant in terms of overall market share. Great distribution means great visibility and great sales.

In fact, it is distribution that helped ITC Foods make its maiden profits this year. From being the tiniest company of the multi million dollar Group that was losing close to Rs.60 crores annually, it has indeed come a long way. With brands like Bingo and Sunfeast in its portfolio, the company’s revenues this year would be Rs.2,200 crores. It has indeed been ITC’s tremendous reach (through its extensive distribution network) that has given ITC Food its competitive advantage. Bingo’s marketing plan included ITC Foods’ distribution of more than 4,00,000 brand display racks at all points of sale. The strategy created such a powerful impact that competitor Frito-Lay also had to come out with their racks.

Yes, advertising gives a brand its visibility. But don’t forget the powerful impact of distribution and partnership strategies too. When Acer entered into a partnership with Ferrari, it started putting Ferrari logos on its laptops. This made Acer laptops standout and increased not just their visibility but also brand value. They began to be perceived as highly as Ferrari cars.

GET OUT – GET NOTICED... NOT JUST IN BUSINESS
If you want your career to go places – you need to do similar. You need to market yourself. You must be your own best advocate – otherwise your hard work may actually go totally unnoticed. The more visible you are, the more likely you will be remembered – especially during the time of raise or promotion. A recent study found that one of the reasons why women were not occupying more high level positions was they did not understand the art-of-self-promotion. So sit up, and find ways to become visible, to make your brand visible. If you want to win, you need to get out – and get noticed!

JUST ONE

‘One’ is not just the lowest single digit numerical value; neither is it just a show of miniscule strength. Instead, the digit has the wherewithal to change national destinies, unflinchingly challenge mighty emperors and irrevocably alter your life condition!

It is just another day, yet today, this one date has begun to signify something of great importance to all of us. Its impact has been felt all over the world. Yes, 9/11 or September 11 today symbolises terrorism. One incident on this day shook up the entire world. Overnight Kabul and Kandahar became the most talked and written about places. The world became more knowledgeable about bombs and forget about our way of thinking, even our manner of speaking changed. ‘Ground Zero’, the original meaning of which was the epicenter of a nuclear explosion, now meant something else entirely. ‘Terrorism’ was no more an activity that happened in far away places for Americans, but something that took lives in their own home. One event and look at the profound impact it has had on all of us.

In fact, one way to judge the impact of any event is to see how much it affects the language we speak. In that sense at least, 9/11 has added words like jihad, holy-war, Taliban and Twin-Towers to our collective vocabularies. Another event had similarly enriched the English language – World War II. Words like jeep, blitz, java, flak, sonar, radar, bazooka and atom bomb didn’t exist prior to World War II.

Clearly, one event can change a generation’s outlook. ‘One’ may be the smallest of numbers, but ‘one’ is all it takes to have a profound impact. It’s interesting to see how ‘one’ has influenced us in more ways than one. To start, take the date 9/11 and flip it once. This one change brings us to a date dramatically different from the previous one. If one stood for terror, and destruction and ruin, the other symbolised unification, hope and brotherhood. The 9th day of November or 11/9 was the day the Berlin Wall fell. If 9/11 divided the world, 11/9 was an attempt to unify a city that had been divided for over 30 years. The 28 mile barrier dividing Germany’s capital was built in 1961 to prevent East Berliners fleeing to the West. ‘One’ of anything (even the flip of a date) can do wonders.

ONE WORD, ONE ACT – CHANGE...
One word and its wrong interpretation caused irreparable damage. The Americans issued an ultimatum demanding the unconditional surrender of Japan. Nearing breaking point, the Japanese wanted to negotiate for peace, but not surrender unconditionally. They issued a statement using a Japanese word ‘mokusatsu’, which technically meant ‘refrain from comment’, but had another interpretation i.e. ‘ignore.’ And that is how the Americans decoded it. Keeping the Japanese ‘refusal’ in mind, Americans continued to fight and eventually dropped two atom bombs – an event that changed Japan forever. One wrong translation caused so much destruction. In contrast, one statement shot this actress to fame and resurrected her failing career. Yes, one racial slur shot Shipla Shetty to fame and made her a fortune. So much so that now everybody seems to want one!

But, it was bravery of a different kind that changed the world. A simple seamstress from Alabama refused to relinquish her seat on a city bus to a white man. It was her one act of courage that sparked the Montgomery Bus Boycott and brought the Civil Rights Movement to national attention. Jack Kemp ‘once’ said, “the power of one man or one woman doing the right thing, for the right reason and at the right time, is the greatest influence in our society.”

ONLY ONE, YET NOT INSIGNIFICANT
It may look small and insignificant but sometimes ‘one’ can have tremendous impact. It was one vote per precinct in key states that gave victory to George Bush. It was one vote by then Vice President Al Gore that approved President Clinton’s budget, which included the largest tax increase in American history. It was one vote that made Hindi the National language. History proves that one vote absolutely does matter. So next elections, remember that your vote could be the crucial deciding factor.

Compared to this vast universe you may look like a tiny dot but you have the power to control this vastness. However small, but you do matter. When in doubt hum the Song “Everybody makes a difference.”

ONE – IS ALL IT TAKES
It was ‘one’ film and ‘one’ title of the ‘Angry Young Man’ that changed the career of Amitabh Bachchan and catapulted him to fame. When he was deep in debt and was ‘written off’ by the industry, it was one game show – Kaun Banega Corepati – that again saw him riding the high wave of fame and fortune. Not just Amitabh, KBC even changed the fortunes of television. Suddenly, TV programming was hot & happening and worth watching again.

Back when Indians were fighting their war of independence from British Colonial rule, the favourite British jibe was that “Indians were not ‘manly’ enough to rule themselves.” Mohammed Salim was a simple boy from Calcutta, known for his ability to keep a football in the air. He, together with his team used football to give a firm retort to the British. He proved the British wrong by defeating them in their own game and showed that Indians were not inferior to the British in any way. Most interestingly, the Indian team played the game bare foot and defeated the haughty English men in boots. That ‘one’ victory sent a strong signal to the whole world!

Large numbers are simply no good because sometimes just ‘one’ is enough. One album ‘Thriller’ shot Michael Jackson to fame and made him immortal.

Napoleon was obsessed with the idea of ruling the world. He seemed unstoppable, conquering one country after another. It took one man, one day to smash Napoleon’s dream of invading Britain. In the Battle of Trafalgar, inspite of being outnumbered by the French, Nelson won and that too without losing even a single ship. The Trafalgar Square in London stands testimony to that beautiful victory.

In the corporate world ‘one’ is the new buzz word. Top executives globally are facing criticism for drawing hefty salary packages and the growing financial crisis. CEO’s are now pruning down their packages to just one dollar. Vikram Pandit the CEO of Citigroup will now take home a one dollar salary, Larry Ellison the Oracle CEO too would take home just a dollar this year as salary – a cool $999,999 less than last year.

Steve Jobs and even the founders of Google have been old members of the ‘$1 CEO club’, which now seems to be getting bigger and bigger. We hope that it also helps the economy – but one thing that it is doing for sure is attracting attention.

‘One’ is small, but has the power to make a big difference. Sometimes the number of chances that you get or need to completely overhaul your whole life is just ‘one’. As Abraham Lincoln said, “It matters not the number of years in your life. It is the life in your years.” Seize the moment now; know that this is your one chance to change everything. Strength, my friend, doesn’t lies in numbers, but in just that ‘ONE’ opportunity. Don’t miss it!

“Shut-up and dance”

A critical part of communication is not what we had thought it to be all along. If history had commanded corporations to ensure that they ‘speak out’ their advertisement campaigns and product features in as forceful a manner as possible, contemporary times are destroying that strategic belief to forward a line of thought that perhaps quite the opposite is true now, if one wishes to succeed fantastically!

I teach a course in communication. After I have taught students the importance of making a good first impression, of the power of words and how to use them effectively, of the factors to keep in mind so that one is understood properly, of how to use one’s voice to make a speech most interesting, I tell them, “Now you know everything about speaking in public, but you still are not a master communicator.” And that is because there is still something more to communication than speaking. Speaking is just 33% of communicating. Then what’s the rest? Well, let’s try to figure out that.

LINCOLN NEEDED IT TOO!

This was decades ago when America was torn with the Civil War and Lincoln was fighting hard to abolish slavery. He wrote to an old friend of his and asked him to come to Washington to discuss some problems. When his friend came, Lincoln talked to him for hours. Lincoln went over all the arguments, letters, newspapers, articles, which had arguments both for and against abolishing slavery. After talking for the whole night almost, Lincoln finally bid goodbye to his friend without even asking him his opinion. His friend later commented that that night, Lincoln did not want advice, he wanted a friend.

A man once met Stephen Covey and put forward his problem, “I can’t understand my kid. He just won’t listen to me at all.” A visibly surprised Covey commented, “You don’t understand your kid because he won’t listen to you? But I thought to understand another person, you need to listen to him!” The father looked even more surprised.

To put it simplistically, what is it that Lincoln’s friend did, which the father in the second case did not do? Yes, listening! That night, Lincoln wanted a sympathetic listener to whom he could unburden himself. And perhaps the father in the second case did not realise that most children want absolutely nothing from their parents but an empathic listening. Children are waiting to open up if only they were listened to without being ridiculed or judged.

HOME OR WORK, IT’S THE SAME

Toyota was designing its Tundra Truck, but considerable inputs come not from designers, but from farmers. A team from Toyota spent days visiting different regions of US – horse farms, factories, construction sites and more – to meet with truck owners. They did not just ask them about their preferences for towing capacity and power (in a truck) but even silently observed them at work. Through this, the team learnt the ideal placement of the gear shifter; they also learnt that the door handle and radio knobs needed to be extra large because pickup owners often wore gloves all day. Clearly, no amount of discussions or brainstorming sessions could have possibly revealed these nuanced preferences.

Earlier, while Burger King used to serve Coca Cola, PepsiCo was trying very hard to convince Burger King to add Pepsi to its menu; but Burger King kept saying it had room only for one beverage. To this, PepsiCo argued that Burger King promoted “choice” in its advertising and offering Pepsi was a way of giving consumers a choice. The negotiations reached nowhere. Finally, somebody in PepsiCo listened, and really listened to what Burger King was trying to say; and consequently changed Pepsi’s pitch. The new pitch stressed the similarly between Burger King and Pepsi. The pitch forwarded the proposition of how both Burger King and Pepsi were number twos gunning after the number ones; and how, therefore, it made sense for Burger King to kick Coke and bring Pepsi in.

Pepsi never in its wildest dreams could have thought of suggesting to Burger King to throw out the leader; but someone out there read between the lines, and bingo, the deal was done. Later, an executive at Burger King said – this is exactly what we were trying to tell them for months, we’re glad they finally listened.

‘Listen’ to succeed in business, for not many people are doing it as everybody is so eager to talk. In listening lies the formula for success. Albert Einstein has famously said: “If A equals success, then the formula is A=X+Y+Z, with X being work, Y play, and Z keeping your mouth shut!”

READ PEOPLE, NOT BALANCE SHEETS

A master negotiator uses “silence” to sell. Silence helps him to listen and actually learn; and even when there isn’t much to learn, it gives you a chance to collect your thoughts. Ever wondered why Japanese businessmen use the help of human translators even when they might understand perfectly well what you are saying. It’s a masterful negotiation technique – it gives them time to frame their reaction and then respond cautiously. If you are too quick to speak/respond, you may make a mistake sometimes. Well, not the Japanese.

Everyone knows that in business, there are few places as delicate and important as the negotiating table. A master negotiator is one who listens well. Not just listens well, but listens aggressively. It goes beyond simply listening to words. A master negotiator listens with his eyes and ears. He observes the other person closely. It was Captain Michael Abrashoff’s ability to listen aggressively that helped him transform the worst ship in the Pacific fleet into the top ship in the entire Navy. He realized his young crew was very talented and full of great ideas, which came to nothing for no one in charge ever listened. So he listened aggressively, observed keenly and picked up every good idea the crew had; and a miracle happened – the worst ship transformed into the best. His simple logic – the crew sees things the officers don’t, all that the captain needed to do was to see his ship from the crew’s eyes. Business is no different. You need to see the business from the customer’s point of view. You need to aggressively listen – which means you see the body language, the facial expressions, the tone of the voice; and not just the words. You understand the feelings behind the words. As someone said, “The first duty of love is to listen.” I would say the foundation of any relationship is to listen, and listen aggressively – as a Chinese proverb says, “To listen well is as powerful a means of influence as to talk well, and is as essential to all true conversation.”

After all, those are aggressive observers and listeners who always get what they want. Remember, every teenager knows the best time to ask his dad for his car is when dad’s in a good mood (preferably in the evening, after he’s had a drink or two!). Good people observers are master negotiators and great leaders. If a teenager can be in the know of these tricks, it’s time you used them too. Customers always give a feedback – either by buying your product or the competitors’. Observe carefully. Listen to the market, watch your competitors aggressively. Many a time, we miss important clues as we are busy ‘acting’ (formulating strategies, changing plans etc). Stop and shut up! It will help you think better.

Motorola had a magnificent run of success in the 1990s when it grew from $5 billion to $27 billion in annual revenues in just a decade. It was around this time that a New Zealand mountaineer Rob Hall died on the Mount Everest. But as his life ebbed away, he talked to his wife; and his parting words, “Sleep well my sweetheart. Please don’t worry too much,” captivated the world’s attention – all thanks to a satellite phone link. Motorola took this as an inspiration and developed a bold and very expensive venture named ‘Iridium’. It planned to launch 66 satellites to ensure people were connected to each other always, irrespective of which part of the world they were in. By the time Iridium was ready to be launched, the world was already used to the traditional cellular service; and no one wanted a satellite phone whose handset was the size of a brick and that worked only outdoors. Iridium did benefit people who were stuck in remote places; however, the company forgot to calculate that not many people needed to call home from the South Pole or Mount Kilimanjaro. The company ignored the markets needs and wants. It failed to listen aggressively and change accordingly. As a result, Iridium – that was launched in 1998 – had filed for bankruptcy in 1999, sealing Motorola’s fate.

So if you want to really make it big and succeed, it might well do you good to shut up and simply dance your way to success.

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