Companies and products don’t die they become irrelevant and fade away

I have heard from many people that the startup initiative in India has been a failure but no one said why. Below is a list I obtained from a social network about the top reasons why startups fail.

 

Interestingly, a startup company had contacted me few months back asking me if I could be their mentor. Their product is on the lines of Askme.com and they were trying to market it in Kerala, my state in India. The key problem was the people of Kerala are not even fully used to the shopping mall culture yet. We still prefer buying from local grocers, medical shops etc. So searching about products on the internet is still a long way away. My question to the company was, do you know if there is a need for your product in the market you are targeting? They had no clue. This is the top reason on the above list. Lack of proper due diligence. What they wanted from me was to understand how to market their product. I told them that you need to go back to your drawing board and figure out something crucial. Simply putting your product out there is of no use. You cannot force people to use your product. So what can you offer them for using your product? You need a better product strategy before you get on to business strategy and that is where marketing strategy comes in. I haven’t heard from them after that.

Even worse is not understanding when the product is ready to be in the market. Mature companies too have new products and services in their pipeline but what makes and keeps them successful is their ability to time their launches precisely. The extreme of this is Apple launching their products whenever they want to because they have a phenomenal market following. But that’s Apple. There is a concept called Minimum Viable Product (MVP) which can help understand when to stop working on the product and launch it. How do we know this? Work on creating those aspects of the product which could create market disruption or get noticed in the market quickly. When this is successful then it becomes easy. People will take over from there. All we need is to take feedback from customers. Customer expectations will tell us which features of the product are more relevant and need to be out there in the market quickly.

There are two phases of every lifespan be it that of the Universe itself and everything within it. Evolving and maturing. Business also follows the same pattern. A friend is learning to be a professional cake maker and my advice to her was simple. If she is going to bake cakes like everyone else is, she is not going to get far. Evolving stage is the experimenting stage where she needs to mix and match and see what unique she can create. So how will she know she has matured? When customers start calling her for her cakes.

My dad has always loved cooking non-vegetarian food. He looks up on a lot of recipes on the internet but then finds his own niche way of cooking. He has been asking me to help him find a market for his food. He cannot compromise on the quality of the products he uses for cooking which essentially means he cannot target the lower and the lower middle strata of the market. If he tries to sell at those levels, he will have to lower his price thereby lowering his profit margin considerably and moreover there will be very less appreciation among those customers for what they are getting. All of this means the key is in the positioning of the products. Positioning will determine the pricing and marketing strategies.

I believe products and companies become irrelevant and fade away rather than fail. Nokia and Kodak are great examples. Nokia phones became irrelevant when their Symbian OS was run over by Android and iOS. With Kodak, the most fundamental mistake happened. They matured and stopped evolving and got run over by technology. Evolving to maturity shows the growth trajectory of the company or the product. Sustaining and staying relevant in the market demands continuous evolution of another kind. This is where the sheer genius of Steve Jobs shines brightly. In the middle of iMacs and Macbooks and iOS and iPods and iPhones and iTunes, he still found the time and space to figure out that there could be demand for a device that could bridge the gap between the Macbook and the iPhone, thus creating the iPad. I have wondered how tuned his mind was into the world of business and how he used to keep his ears to the ground. He seems to have understood the threat of stagnation and becoming irrelevant which should be the reason why he created such a huge product catalogue and a possibly unknown product pipeline on which he was supposedly working till the time of his demise.

There are great companies and greater leaders to look up to. But ultimately success depends on the course we charter and when we are able to muster the strength, wile and guile and navigate ourselves through the choppy waters of the business world.

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The relationship and disconnect between business and projects

In an interview a few years back for a project management role, the interviewer asked me what project management was. I was taken aback a bit. First of all that’s too generic a question to ask an experienced candidate. Second, project management is such a vast area that it is not possible to explain in a minute or so what it is unless I were to record and playback what is known as industry standard definitions. So I replied that project management is the management of execution of business strategies. The interviewer looked lost for a moment and for a very good reason.

The evolution of the IT industry has created mayhem and consternation in the understanding of business and projects. The mid section of the IT industry has swelled up with managers and is bursting at it’s seams. The hierarchy and designations are complicated and ridiculous. Even more confusing are designations that are total mismatches to the roles. I have worked with the designation of Senior Consultant and the role had got absolutely nothing to do with consulting. Then there are companies with Project Manager designation but the role would be as an individual contributor. What would make sense is that a project would have a team and the manager of the project would also manage the team. The designation of Business Analyst is even more bewildering. Fundamental requirements are to have in-depth knowledge of some software applications.

In one of the case studies during my MBA program I had read about a company whose founder and CEO had approached a venture capitalist (VC) for investment. After due diligence, one of the conditions put forward by the VC was to appoint a new CEO for the company. The founder refused and walked away. Six months later, he came back to the VC and agreed. The VC had wanted him to focus on the products and services his company was offering and let someone else handle the business and financial aspects. So every company has a top management team that walks, talks and breathes only business and money.  It is here that business strategies get created with the objective of better financial outcomes.

I use a simple analogy when talking about business strategies. If I get stamped on my foot, my foot doesn’t cry. The sound comes from my mouth. Similarly if there is a problem in business the red bulb may not necessarily be flashing from the problem area. This is why understanding the business problem is so crucial. Business problem could also be a new venture for the company without proper understanding of moving ahead. Digging deeper into the business problem has direct impact on the quality of business strategy development. But having the best business strategy amounts to nothing without taking action on it and execution of business strategy is a different beast altogether.

One critical aspect of having different functions inside organizations comes into focus during execution of business strategies. The business strategy could have a strategy for the sales team which in turn could result in a strategy for the finance team and so on. Once strategies for different functions are established, then comes their execution. It could be as minimal as a small change without any consequences. But where there are financial outcomes then there would be accompanying risks as well. This is where the whole premise of project kicks in. So projects are essentially execution of business strategies with the objective to create positive financial outcomes. The execution of a business strategy can be broadly visualized as a change management program with several projects managed and executed within its boundaries.

Every project is intended to create a positive financial outcome so I visualize every project manager as having a small cloud of money over his/her head. A senior manager who manages several project managers would then be having an accumulated bigger money cloud over his/her head. Scale this up and the CEO will have the biggest money cloud over his/her head. The divide between creation and execution of business strategies has given rise to the concept of outsourcing. MNCs develop the entire premise of projects before shipping out to their factories and back offices where the projects are executed to create products and services.

Better understanding of business strategies and organizational requirements has a direct bearing on project management. But project managers usually do not get their sights that far and are not expected to stretch their understanding beyond the boundaries of their projects. This is why I believe projects either fail or project outcomes do not result in positive business outcomes. Outsourcing has only complicated and compromised the purpose of projects. A project manager in another corner of the world may not have any idea about the intended outcomes of the business strategies which has given rise to the project he/she is managing. Early in my career I had to resolve a problem with an IT application of a client and according to the SLA with the client I had 3 hours, so I worked on other more important issues. When I finally reported the resolution, the client’s staff lamented about how their work was stuck and the amount of business they lost in those 3 hours. Poor understanding of client’s business environment and requirements coupled with poorer understanding and communication were the reasons.

The relevance and importance of projects and project managers should never be undervalued. In India business degrees are not required to manage and execute projects. This in itself shows the disconnect between business strategies and projects. This is why the growth of project managers gets restricted to the project and program management levels and very few get to break into the top management. This can be observed from how companies hire for executive level positions from other companies rather than their own employees growing through the ranks into those positions.