Learnings and observations – Platform Business Firms

The 4 axes of online learning

As the world moves to more and more online work and learning, a colleague of mine triggered some thoughts in me – can everyone learn the same way online? Do our standard theories of learning work in the online world?

Of course, there are three kinds of teachers – those who dread online teaching (they believe that they will have no control over the students’ behaviours); those who are cautious (they believe that we can do somethings online, but not others); and those who are willing to experiment and adapt (they either believe that they can deliver as they are confident of their content that the medium does not matter). This discussion is for another day. Right now, let’s focus on the learners and their learning styles.

I believe that there are eight styles of learning in the online world. Of course, I do not claim to have scientific evidence that these are mutually exclusive and collectively exhaustive – possibly a research study is in order. These are anecdotal based on my own experiences of teaching face-to-face, purely online, as well as hybrid (some students face-to-face and some others online). There may be a range of other such classifications as well, from the classic Kolb’s learning styles inventory to more detailed studies.

The list, first

Visual (spatial)
Aural (auditory-musical)
Verbal (linguistic)
Physical (kinaesthetic)
Solitary (intra-personal)
Social (interpersonal)
Logical (mathematical)
Emotional (action-response)

These styles are not mutually exclusive, and learners prefer combinations of these. These are just pure types. The combinations define one’s learning style.

The elaboration

Visual/ spatial: learning through pictures, images, maps, and animations; sense of colour, direction, and sequences; flow-diagrams and colour-coded links preferred.
Aural/ auditory-musical: learning through hearing sounds and music; rhyme and patterns define memory and moods; learning through repeated hearing and vocal repetition is preferred.
Verbal/ linguistic: power of the (most often) written word; specific words and phrases hold attention and provoke meaning; negotiations, debates, and orations are preferred.
Physical/ kinaesthetic: sensing and feeling through touch and feel of objects; being in the right place can create thoughts and evoke memory; role plays and active experimentation are preferred.
Solitary/ intra-personal: being alone provides for reflection and reliving the patterns of the past; self-awareness through meditative techniques; independent self-study and reflective writing (diaries and journals) preferred.
Social/ interpersonal: learning happens in groups (rather than alone) through a process of sharing key assertions and seeking feedback on the same from others; need for conformity and assurance as bases for learning; group discussions and work groups preferred.
Logical/ mathematical: building on the power of logic, reasoning and cause-effect relationships; developing and testing propositions and hypotheses; build a pattern/ storyline through logical workflows of arguments/ relationships; focus on the individual parts of a system; lists and specific action plans are preferred.
Emotional/ action orientation: building on the power of emotions, arising out of loyalty, commitment, and a larger sense of purpose; being able to align a set of actions to a compelling vision of the future, following directions of a leader; focus on the gestalt and not on the specifics; energy and large-scale transformations are preferred.

The four axes

Let us look for examples/ instances where each of these styles would work the best. Visual would work best when the inter-relationships are complex and can be represented through visual cues (or simulated cues), whereas physical world work best when the relationships could not be represented, but need to be experienced as a whole. How would like to take a virtual tour of the Pyramids of Giza?

Auditory style of learning works best when the brain remembers patterns, and rhyme precedes reason. Whereas, verbal style is most suited when reason is preferred over anything else. In other words, when specific words and phrases (like catchy acronyms and slogans) capture the imagination of the learner, verbal is best suited. Imagine trying to learn Vedic hymns purely through printed textbooks!

Solitary learning works best when one can reflect effectively by shutting out external cues; whereas social learning depends on feedback and reinforcement from others for learning to take shape. Imagine learning public speaking in social isolation, or seeking social confirmation and feedback in the process of poetry writing!

Logical learning style works best when the relationships could be detailed and represented as a series of cause-effect relationships. However when such relationships cannot be established, we learn through emotions. Imagine the calls for action in the play, Julius Caesar – “Friends, Romans, and Countrymen!” I would think the crowd responded more to emotional appeals than reason!

Architecting the online class

As learners and teachers in the online world, one needs to be cognisant of their own preferred styles across these four (continuums) axes. For instance, a class on machine learning would tend to be highly visual, verbal, solitary, and logical; whereas a music class is likely to be more physical, auditory, interpersonal and emotional.

The learning context has to be chosen appropriately suiting the styles – of both the content and the learners. The technology has to suit the same. Imagine for instance, a group of 400 learners tuning into a class on brand management through an online medium like Zoom. The instructor has pretty much little choice other than delivering a lecture, with text chat from the class as real-time feedback, and thence the basis for interactivity. On the other hand, if the class size was smaller, say around 40, may be the instructor could use case analysis as well. As a case teacher, I have managed to interact (two-way) with as much as 30 students (from a group of 44 active participants) in a single 90 minute class. I taught a case-based session on digital transformation imperatives online to a class of 50-odd students. I used a combination of visual and interpersonal styles, without compromising on the logical arguments as well as pre-defined frameworks. I used two separate devices – an iPad with an Apple Pencil as a substitute for my whiteboard, and my desktop screen sharing as a projector substitute. I was able to cold-call as well! That way, my class was visual, logical, verbal, and interpersonal.

To the same cohort, I taught another session on implementing a digital transformation project, using another short case-let. This session in contrast, was more visual – the framework was largely on the whiteboard than on the slides; less verbal, a lot emotional and logical, and less interpersonal (more reflective observations about what would work in their own firms).

What works best is also driven what are the learning goals. Of course, these learning styles should be the same for synchronous (live classes), asynchronous sessions (MOOCs), as well as blended formats.

In summary, the architecture of an online session should include elements of the learning styles (driven by the learners and instructors strengths, as well as the content being delivered). Apart from the learning styles, the architecture should include three other components – the form of interaction, the immediacy of feedback loops, and the nature of interaction networks. The interactivity could be both audio-video or text; the feedback loops between the learners and the instructors could be immediate or phased; and the peer-to-peer interactions may or may not be required/ enabled.

I look forward to your comments, feedback, and experiences.

Cheers.

Glass box organizations: Platforms

Way back in September 2017, David Mattin of Trend-Watching wrote about Glass box brands. He argued that organizations are moving away from being black boxes (where customers could only see what was painted outside) to glass boxes, where everything that happens inside and outside of the organization is visible to everyone.

The primary arguments of the glass box world are: (a) in an era of social media and high organizational attrition, even the mundane activities like routines and rituals are visible to the outside world; and (b) trends like automation, inequality, and globalization have led to “meaningful consumerism”, bordering on activism. Therefore, consumers are making choices about their brand affiliation and loyalty based on the company culture and values, apart from other considerations.

If the internal culture is the window of the brand to the outside world, it is important for every organization to meaningfully nurture it, articulate it, and live it. I am not going to dwell on how to develop your internal culture and values, but the implications of the glass box metaphor in the context of platforms and digital organizations.

Multi-sided platforms as glass boxes

By definition, multi-sided platforms (MSPs) have many “sides” that drive network effects. For instance, a guest chooses to use Airbnb while travelling because she values the number and quality of hosts. When Airbnb doesn’t treat one side well, it directly impacts the quality of interaction with the other side and affects the strength of network effects. Which in turn, affects the willingness to join (WTJ) and willingness to pay (WTP) of the users on the other side. The quality of the platform deteriorates and can even degenerate into a “market for lemons”. Such dynamics of network effects ensure that platforms do not unduly favor one side over the other, especially when there are cross-side network effects. However, these do not include how the firm treats its employees – remember Travis Kalanick and Uber?!

Digitalization and glass boxes

The omnipresent social media and the constant need by employees and customers to document share their experiences online (most often with the general public, including strangers) has been one of the drivers of glass walling of organizations. Isn’t it why the digital platform that allows for employees to review their workplaces called glassdoor.com? Sure, glassdoor.com monetizes its corporate side of the network through its recruitment services, but its primary differentiator is the large volume of anonymous employee reviews of the work culture and salary structures. We know that when the side that is being reviewed is monetized, it is in the interest of the firm to have good quality reviews on the platform, failing which it finds it difficult to attract enough quality candidates. There is enough incentive to witch hunt people who write bad reviews, as well fill the site with paid/ fake reviews to overshadow the “real” bad reviews. It is still a glass door after all, not a glass box!

Digitalization of employee experience holds a significant potential in managing the quality of the brand, as perceived outside the firm. A lot of firms focus on improving customer experience in their digitalization journeys, but employee experience is equally critical (read more about it in one of my earlier posts). Good employee experience ensure that the positive experiences have spill-over effects on efficiency, performance, internal culture, as well as customer experience. A variety of organizations including VMWare, SAP and IBM have laid explicit focus on improving employee experience in their digital transformation journeys.

Stay home, stay safe, stay healthy!

Learning from failures

The recent suicide of Mr. V G Siddharth, the celebrated founder of Café Coffee Day prompted me to reflect on how individuals and organisations think about failure (read what he wrote in his note to the board, here). In our classes on innovation, we keep harping on why we should learn from failure, I have not had an opportunity to dwell on the “how” question, yet. Here are my thoughts on how firms can learn from failures.

One of my colleagues at IIMB, introduced me to the work of Prof. Amy Edmondson, especially on psychological safety. While reading about psychological safety, I came across her work on three types of failure, specifically in the popular HBR article titled, “strategies for learning from failure”.

Types of failures

She elucidates on three types of failure – preventable failures, complex failures, and intellectual failures. Preventable failures occur when one had the ability and knowledge to prevent it from happening. Making silly mistakes (in a test) that you could have avoided, had you spent some time for review; deviance from a manufacturing/ service processes due to laxity or laziness; and just taking some things for granted, like jumping a traffic signal in the middle of a night, are examples of preventable failures. Such failures are clearly attributable to the individual, and therefore she/ he should be held accountable. One way of managing such preventable failures is to define and keep following checklists and processes; establish clear lines of supervision and approvals; and conduct a series of intermediate reviews at predefined critical junctures.

Complex failures happen in spite of having processes and routines. They happen due to failures at a variety of points, including internal and external factors, that individually might not cause failures, but when occurring together, may cause failures. Agricultural (crop) failures, business (startup) failures, or even industrial accidents like the Bhopal gas tragedy and Fukushima disaster are examples of complex failures. Such factors are difficult to predict as the combination of problems may not have occurred before. Fixing overarching accountabilities for such failures are futile, and these can be considered unavoidable failures. It is these kinds of failures that provide fertile sources of learning to firms. Firms need to be prepared to review such failures, dissect the individual factors, and establish robust governance processes so as to (a) sense such systemic problems when they occur at the individual factor levels; (b) erect early warning signals for alerting/ educating the organisation about escalations of these problems into failures; (c) and define options for counter-measures for managing each of these problems, in particular and the occurrence of failure at the systemic level.

Intellectual failures happen due to lack of knowledge about cause-effect relationships. Especially at the frontiers of science and behaviour, where such situations have not happened before. Such situations are ripe for experimentation and entrepreneurial explorations. Firms need to sustain their experimentation and entrepreneurially approach the problem-solution space. There could be situations where the solution is too early for the problem, or the ecosystem is such that the problem is not ready to be solved. Indian automobile industry’s (for that matter, all over the globe) experimentation with electric vehicles would fall under such experimentation. Processes such as open innovation and embedded innovation would greatly contribute to learning. One such experimental innovation boundary space is JOSEPHS, built in the city centre of Nuremberg, Germany as an open innovation laboratory.

Learning from failures

In order to learn from preventable failures, organisations need to strengthen their processes, embark on benchmarking exercises both within their organisation as well as others in their competitive/ collaborative ecosystems, and continuously evaluate the impact of their initiatives. The Indian telecommunications firm, Airtel, had a promise of providing consistent consumer experience to their customers across all the 23 telecom circles they operated in India. One of their initiatives was to constantly benchmark each circle’s performance on a wide range of non-financial parameters and enable other circles to either learn & replicate the process that led to the performance or justify why their circle had different processes that would achieve the same performance. Such justifications would be documented as new processes and would be candidates for replication by other circles. This enabled Airtel improve its performance to six sigma levels and provide consistent customer experience across all its circles.

Learning from complex failures require firms to undertake systematic and unbiased reviews of such failures, typically by engaging external agencies. Such reviews would be able to dissect failures at each factor level, interdependencies across all these factors, and the causes of failure at the systemic level as well. When unbiased reviews happen, they allow for organisations to strengthen their external (boundary-spanning) opportunity sensing and seizing processes; refine their interpretation schema to provide the organisation units/ senior management with early-warning signals; and create options for managing each of these problems well before they actually occur. For instance, in response to the Fukushima Daiichi Disaster, the Japanese Government decided to review its nuclear power policy and undertook a variety of counter-measures, including shutting down of old/ ageing power plants and introduced a slew of regulations/ restrictions on nuclear industries.

Learning from intellectual failures is possibly the easiest. The firm just needs to “persist”. One of the firms I was consulting to, referred to their experimental product-market venture as a Formula-1 track: failures are insulated there, whereas success can be easily transferred to mainstream product-markets. It is such kinds of mindset shifts that enable to continuous learning from intellectual failures. For instance, the failure of the E-commerce venture, FabMart in the early 2000s Indian market is an intellectual failure (this is well documented in the book, Failing to Succeed by its co-founder, K Vaitheeswaran). When we wrote the case on FabMart in the year 1999 (available in the book Electronic Commerce), we hailed it as a harbinger of change in the way India will adopt Internet and E-commerce. However, the business failed. The co-founders regrouped over the next decade and have created other E-commerce enterprises (Bigbasket and Again). The failure of the earlier venture provided them an opportunity to reflect on the specific reasons for failure, treat it as an experiment and learn from it. Intellectual failures, therefore, need to be celebrated and treated exclusively as an opportunity to learn from them.

In summary, mistakes lead to failures when we fail to learn from them and keep repeating them. Let us admonish repeated mistakes and celebrate failures!

Cheers!

Business biographies

I was invited to speak at the Bangalore Business Literature Festival 3.0 (http://bangalorebizlitfest.org) yesterday. I prepared some notes, but true to my style, spoke mostly impromptu. It was a great opportunity to meet with writers I read regularly, as well as a lot of aspiring writers. No, I am not a prolific business writer, in fact, I have not written a single business biography yet. I wondered why I was drafted in as a speaker in the session on business biographies and management education. The moderator of my panel, my colleague Prof. Ramya Ranganathan clarified – I was in because I write cases and use firm biographies in my teaching and consulting. So, I thought I would begin by distinguishing between biographies of firms and biographies of individuals. Consequently, it is important to clarify these three words – biography, history, and a case.

Biographies of people and firms

In a panel before mine, a question was asked (to which the panelists had no answer, and it was part of my preparation!): in writing a biography, how do we separate the founder from the firm (especially in the case of a startup)? As a significant part of my classroom conversations, I separate the two explicitly. When you write and analyse a set of events in the form of a chronology, it is very difficult to separate the person from the firm. If you want to chronicle a firm biography, it is important to slice the narrative across specific decisions. Say a diversification decision could be narrated as a specific chapter bringing in the environmental context, how it was perceived by the leaders, how and what strategic change was initated, what were the implications of the change on the internal and external contexts, and if and when it achieved its intended purpose.

This way, writers can separate a firm biography from an individual biography, and highlight the idea that firms outlive (and outperform) people. As a strategy teacher, it is important for me and my class to focus on the firm independent of the strategist. And this distinction is critical to learning and application.

Biography, History, and Case

As a case writer (I want to believe that I have been prolific), I am continuously confronted with this distinction. And when I teach/ mentor colleagues on writing cases, I make sure I tell them that they are not writing a biography or history! So, it important to articulate the differences.

The purpose of a historical narrative is to recreate the context in the minds of the reader and inspire. Some exaggeration is acceptable; some glorification of the protagonist is expected; and therefore, triangulation of methods and validation of data are not that critical (though good history is based on well organized and validated data). The purpose is to present the reader with a interpretive representation of the context. The example that came to my mind yesterday was that of the imagery of the Rani Laxmi Bai of Jhansi. The job of a historian is to recreate an image of the Rani in the minds of the reader with his narrative. Every one (in my audience) may have heard of her, and having read the narrative/ heard stories about her, the readers would form an image of her in their own minds. It is inconsequential if she was right or left-handed; if she had 12 guards of 16; or if she indeed wore a saree as depicted in the imagery. What is important is to highlight the paradoxes – a woman warrier in a society and time when no woman fought in the frontlines; a saree-clad horse-rider; a lady carrying both a baby slung on her back and a sword in her hand; and the like. Symbols of bravery and obstinence. Period.

On the other hand, a biographer is expected to carefully validate all data and record them diligently. She is expected to present all aspects of the personality – the good, the bad, and the not so expected facets; from multiple perspectives, without judgement. The biographer cannot exaggerate, should not glorify, and should present the facts as they are without any interpretation. It is for the readers to make sense and take specific learning. It could be anything; like when Prof. V Raghunathan spoke yesterday, he said he picked up the idea that a man can do more work by sleeping only four hours per day, when he read the biography of Napolean (who apparently slept for four hours on horse back). Maybe, when I read the same biography, I would pick up something else, and you something totally different. No representations here.

A case is a decision-focused narrative. The purpose of a case is to emphasize how learning about a context can help students and learners from applying it other contexts. My colleague Prof. Rakesh Godhwani narrated a story yesterday. It was about the great imposter, Dr. Joe (made famous by the movie of the name: Catch me if you can), on how as MBAs we need to “fake it till we make it”. A member of the audience wanted to know the ending – did he get rewarded for saving lives, or did he go to jail for impersonation? As a case writer and management teacher, I would say, the ending does not matter. What matters was the criteria to make the decision, not the actual decision. Therefore, good cases do not need to be neat and complete. Then are non-comprehensive accounts of events and antecedents leading to a decision.

Therefore, the historian would create an imagery of the Rani of Jhansi, the biographer would focus on her valor, while the case writer would discuss the context of why she was at all required to fight (in the context of British India’s Doctrine of Lapse).

Celebrating the also-rans

I called the audience to write about firms that were also-rans. Success has many fathers; and these days, even failures have enough parents. In fact, I was proud of the fact one of my first cases as an academic was about India’s first ecommerce firm (way back in the year 1999), Fabmart.com; and in one of the panels yesterday the co-founder of Fabmart.com, Mr. K Vaitheeswaran was speaking about how the firm failed subsequently and his coping with that failure (read about his book, Failing to Succeed, here).

However, there is little focus on the also-ran firms. Since a majority of our students are also-rans who make their careers in also-ran firms, it is important to study them. It is important to study how these firms perceive the environment, adapt/ adopt, make strategic shifts, learn/ unlearn, pivot, take feedback, measure impact and performance, and go round and round in circles! Developing, what we strategy researchers call, dynamic capabilities. These bios are extremely valuable for the management researcher.

So, the next time you hear about a firm that is neither a success or a failure, remember that there is a lot to learn in terms of processes, routines, and dynamic capabilities from them.

Cheers.

PS: Edited Prof. Rakesh Godhwani’s coordinates and the name of the movie he referred to (Catch me if you can) on 11 Sep 2017.

Changed the featured image: 21 Sep 2017.

Management theory – just mumbo jumbo?

I am writing here after a really long time. During one of my train journeys between Chennai and Bangalore last weekend, I happened to re-read this article that I had saved for later reading on my mobile device – this appeared on The Economist six months back (read it here). The Economist argues that management as a discipline is similar to the Medieval Catholic church that was transformed by Martin Luther about 500 years ago (business schools = cathedrals; consultants = clergy; the clergy speaking in Latin to give their words an air of authority = management theorists speaking in mumbo-jumbo that only their peers can understand; and having lost touch with the real world).

The Economist avers that all management theory is about four basic ideas – consolidation across industries rather than competitiveness, fewer entrepreneurial success than celebrated in popular discourse; maturing organisational bureaucracies that slow down firms rather than speed; and the seemingly inevitable globalisation being reversed by trends (including ‘Make America Great Again’ and ‘Brexit’). A redemption is therefore called for. Let me re-examine the four trends in the context of Indian business context.

1. Consolidation rather than competition

There is surely a trend of consolidation in Indian industry. The telecom service business is a case in point – the entry of Reliance Jio has led to severe performance pressures and possible consolidation of the service providers (read here); SBI merging its associate banks and other possible PSB mergers (read here); or even the retail industry (read here). Is competition really going down? I think a variety of management theorists would say no. From high velocity environments and hyper-competitive environments in the mid 1990s through mid 2000s, the discourse has evolved to disruptive innovation in the late 2000s, to Industry 4.0, Internet of Things, Artificial Intelligence, and Big Data in the mid 2010s. The fads have changed, but the discourse has always been dominated by some fad or other. We management theorists have and will always seek to sustain our legitimacy by maintaining how difficult it is do business ‘today’ and in the near future. Has there been a time when a management scholar has said that “we live in stable times”?

2. Entrepreneurial failures

Yes, we live in interesting times. There are more and more firms founded, especially in clusters like Bengaluru (erstwhile Bangalore) and Gurugram (erstwhile Gurgaon). But as The Economist argues, there are more and more entrepreneurial failures that the media reports. And these failures come in myriad forms – simple shutdowns like the ones described in these articles (25 failed startups in 2016), or sellouts to larger competitors (see this list of acquisitions by Quikr).

3. Organisational bureaucracies

With so much churn in the ecosystem, we management theorists propound that business is getting faster. Yes, network effects allow for some businesses to scale faster than traditional pipeline businesses. However, given the ubiquity of such businesses and easy imitation of business models, a lot of startup failures are attributed to these businesses not scaling sufficiently fast enough! Think Uber in China, Snap Deal in India, and other such startups. Scaling is easier said than done.

4. Rise of nationalistic tendencies

This is possibly true of most economies in the world today – rise of nationalism, and the ‘de-flattening’ of the world. Right wing protectionism is on a steady rise, and in some countries, it has reached jingoistic heights.

Time for redemption. What can management theorists do?

It is high time we redeem ourselves and the discipline. Given these trends, here is a callout for management theorists to make their discourse relevant to the business environment of today. We (as management theorists) need to get off the ivory towers and start communicating to the managers of today and tomorrow. While research output as measured by top-tier journal publications is important for an academic career, it is equally important for translating that research into insights relevant for the business managers. The Indian management researcher has very little options to publish high quality research in Indian journals. The quality of Indian management journals targeted at academics leaves much to be desired. Neither are there a variety of high quality Indian practitioner-oriented journals. And the circulation numbers of these journals amongst Indian CEOs? And where are the cases on Indian companies? The number and quality of cases published by Indian academics on Indian firms are too low to be even written about.

My platform business models journey

Writing this blog after a long gap. New administrative responsibilities at my school required me to invest some mindspace towards understanding the role, my team (and their roles), and setting up priorities and processes.

I am also figuring out how to respond to blatant plagiarism – some pages from this blog have been plagiarised (word by word, including my writing in first person!) and reproduced at another blog. For example, check this out: http://digiplus.runwise.co/network-mobilization-platform-businesses/ and how this page is different from the original post: https://srini108.wordpress.com/2016/05/26/network-mobilization-in-platform-businesses/. Another page that has been plagiarised is here: http://digiplus.runwise.co/building-platform-business-hard-work/, which is an exact copy of my post at https://srini108.wordpress.com/2016/05/03/building-a-platform-business-is-hard-work-not-for-lazy-people-a-response-to-prof-ajay-shahs-column-in-the-business-standard/. I have written to the supposed author requesting for removal of the infringing posts, but have heard no response. Plus, I have left comments at the bottom of the infringing blog pages that those pages were indeed plagiarised, but those comments are “awaiting moderation”. I have now learnt a lesson. All these pages now come with an explicit copyright assignment, and I am going to make it difficult to plagiarise with increasing use of personal pronouns.

Today morning, I was asked by our Dean to present the evolution of my research, teaching and consulting interest in platform businesses. It was an interesting exercise of thinking through the evolution over the past three years. In this blog post, I intend to capture a short glimpse of the same.

A network of accidents

It all began with a network of accidents. Three accidents to be precise. A dorm-mate from over 20 years back invited me to his company (he had just relocated to Bangalore) for a short discussion on product design ideas. When I went there, I discovered that apart from him, there were enough members of his team who were my students at both IIMB and IIML. Which made the discussion interesting and lively. The “product” that they were developing was actually a platform for the FAs to serve their business process outsourcing customers. And we had a fruitful discussion on the economics of platforms, why network effects are important to understand, and how can the company monetise the efforts, if they chose to (subsequently, they chose not to monetise the platform directly).

The second accident was when a colleague of mine at IIMB could not attend an event his friend was planning. This friend was an entrepreneur setting up a business around pharmaceutical retail supply chain, and had invited his “Professor friend” to talk to his customers (pharmaceutical distributors). My colleague could not attend the event, and requested me to stand in for him. I travelled to Chennai, had an eventful breakfast with the founding team; and over a couple of aloo parathas (potato filled Indian bread), changed their business model from a SaaS model to a platform business model. The said breakfast meeting, I am told, is currently a legend in the company history/ water cooler talks.

The third accident took place (though not in the same chronological sequence as being reported) when another colleague of mine from the Quantitative Methods was leading an team writing a case on a firm. The case writing team felt that there were more strategic issues in the case, and invited me to join in one of the meetings. During the meeting, it was apparent that the firm was transitioning from being a product firm (selling boxed software) to a platform-based business, where product was just a hook for a variety of other services and value propositions.

Consulting and advice leading to case writing and research

These three accidents led me to document them as cases, and I began providing advise/ consulting to some of them. I got introduced to more firms operating platform businesses, and discovered that some of these entrepreneurs were actually making decisions about platform businesses, quite intuitively, without actually knowing the theoretical work behind the same. And boy, weren’t they successful! They have survived the dot-com bust, a series of recessions, and the growth of digital businesses. More learning talking to these entrepreneurs (academics call this as grounded theory). More cases followed, and I began to understand the economics behind the same. I initiated a series of projects around the same, got funding from IIMB and FAU for the same, and wrote a series of cases.

Evolution of the course(s)

As the number of cases bludgeoned, I was invited by the FAU (http://wi1.uni-erlangen.de/) to teach a course on digital business, and I latched on to the opportunity to launch a course on platform strategies. That one course led to another, and I offered an improved version of the same at IIMB immediately thereafter, and then as the number of cases grew, and I began filling in learning gaps, offered a larger version of the same at IIM Trichy. And now both the FAU course (http://wi1.uni-erlangen.de/teaching/strategies-platform-mediated-organizations) and the IIMB course (http://www.iimb.ernet.in/node/5610) have now become 5 ECTS and 3 credit (full thirty hours) courses.

This blog

As the courses matured, I began writing a lot of notes for myself. In fact, true to a business school professor, I would typically prepare for the class, get a lot of insights to share with the class, share a few in class, and the rest of them would remain in my notes. Some of my students continued to urge me (no, I am not substituting it with encourage) to write a blog. And I began this blog in April 2016 (once my course was over). My teaching assistant, who travelled with me to IIM Trichy and took copious notes of my classes was extremely helpful in ensuring that the information loss from the class discussion to the written notes was minimised.

Blog leads to more connections and research

Based on this blog, some of you came back to me seeking specific advice on setting up and running platform businesses; I engaged with a few firms, and more cases followed. The blog now has led me to more connections, and spurn on more research questions. In the meantime, a lot of my PGP and EPGP students have undertaken projects on specific questions around the platform business models (I will run a series on those projects in the next few weeks), and more insights and research questions emerged.

The journey has been exciting, I have learnt a lot. And hopefully, things will continue.

Social Buffering – Is it lonely at the top?

Yesterday (24^th August), I connected three dots. First dot: I met with a couple of my friends from 20 years back (we were batchmates) – one of them celebrated his tenth year of entrepreneurship this week, and another was taking baby steps into entrepreneurship in the last three months. Second dot: I read a piece on LinkedIn on why Samsung cannot be Apple. Third dot: I read an article in the Strategic Management Journal (SMJ) on executive anxiety. And tossing and turning on my bed, late in the night, the three dots connected. Voila.

Dot #1: The entrepreneurial fetish with fund raising

When two entrepreneurs meet with a business school professor, it doesn’t take long for the conversation to veer from business models to fund raising. So it did happen yesterday. The conversation was going towards evaluating if angel investing is better than crowdfunding, and we agreed that the money raised is much less valuable than the insight/ knowledge/ resources/ network the angel investor(s) would bring in. Isn’t that why those investors are called “angels”, as they have some magic wands in their hands? Slowly, bit by bit, I evaluated their business plans and broke the entire fund requirements to an amount that was so small that they would not take money from anyone other than one with an enormous network or experience in that domain. As entrepreneurs, it was extremely important that they realize that money from the right source is far more valuable than the denomination of the currency (or the balance in the bank). The value of the advice and mentoring the angel investors bring in is severely under-rated in today’s entrepreneurial ecosystem. Here’s calling all entrepreneurs to evaluate your list of mentors – what specific insight, learning & knowledge, experience, resources, network do each one of them bring in. Prune/ add ruthlessly.

Dot #2: Singularity

The drive back home from North Bangalore to South Bangalore in the evening traffic is not something I enjoy, unless I have some company or reading to do. Yesterday, I had both. The reading was this LinkedIn post by Anish Behera on Why Samsung will never be Apple? (read it here). If you have returned back to this blog after reading his piece, you know where I got the three dots idea from, right!

His primary argument is that it was important for Steve Jobs and the American culture to be autocratic and not suitable for Korea and Samsung. He argues that American culture of Singularity is more suitable for innovation than the Korean (in fact, he extends his argument to most of Asia as well) culture of Conformity. Though I am glad that he included Mahindra under the singularity dimension, I think it is a slight stretch. But that is a different debate and discussion.

The substance of his argument was that Apple ha(s)d both singularity (one person) and an opinionated (non-conformist) culture that fostered innovation. What it means for entrepreneurs of today is not so much to create a person who is as charismatic (and possibly maverick) as the leaders he quotes, but to have a singularity of purpose that guides decision making. Strong vision, broader search for alternatives, speed of decision making, and discipline in execution arise out of singularity and non-conformity. Both, together; not a preponderance of one over the other. Pure singularity without a culture of non-conformity would result in a narrow search of alternatives and may lead to phenomena like groupthink. Non-conformity without a strong purpose and direction would result in slow decision making and lack of discipline in execution, and may to phenomena like predictable irrationality.

Dot #3: Social buffering

A couple of weeks ago, Apple CEO Tim Cook asked, “Hey Siri, why am I so alone?”. In an insightful interview with The Washington Post (read it here), he talked about a variety of things including not being able to replace Steve Jobs. But what caught my attention yesterday was the statement that “running Apple is sort of a lonely job”. And when I read an academic article on the Strategic Management Journal (yes, that is my primary job) by Michael J Mannor, Aadam J Wowak, Viva Ona Bartkus, and Uuis R Gomez-Mejia titled, “Heavy lies the crown? How job anxiety affects top executive decision making in gain and loss contexts”, (SMJ, 37,9, Sep 2016) the dot #3 emerged. The heavy crown of leadership can lead to significant anxiety in top executives (so beautifully articulated by Tim Cook when he talked about how he prepared for a congressional hearing – have you not read the interview, yet?). An effective insurance against such anxiety is to surround oneself with a team that is supportive of one’s decisions, effectively buffering the executive from threats from the environment. Building such a supportive team, that shields the top executive from the external world without a risk of opportunistic behavior from the buffer themselves is what the authors label as social buffering.

The implications of social buffering (according to the authors) are three-fold. Higher the perceived threat from the external world (and therefore the anxiety of the top executive), more likely the social buffering behavior. Secondly, in spite of the social buffer, it is likely that anxious executives might be more risk-averse than others. And finally, in contexts that represent losses (rather than gains), executives would be more likely to build strong social buffers. For instance, executives leading firms in declining product-markets may build stronger social buffers than those in high growth contexts. To put this in simple terms, the more vulnerable the top executive feels about the environment, the more she will surround herself with supporting team members (who share the same thought processes); it will make her more risk-averse; and more so, when faced with losses (than gains). Given that loss aversion is more pronounced (executives worry more about losses than celebrate equal quantum of gains), this social buffering can become more and more pronounced in malevolent environments.

Connecting the dots

Find an investor who “has been there, done that” + Build a culture of singularity & non-conformity + Beware of social buffering

While it is important that you seek angel investments from someone who brings in a lot of experience, insights, expertise, and a network, it is also imperative that you build a culture of singularity and non-conformity in your organizations. If you do not pay active attention to these details, you may end up surrounding yourself with a social buffer, promoting and highlighting only those in your network who conform to your thoughts and beliefs while letting others go, you run the risk of running your enterprise to the ground with high anxiety, low risk appetite, and conformist thinking. Without an active innovation programme, replication and possibly fast following strategies are likely to dominate the organizational discourse.

Prescriptions

Seek out investments carefully. Do a proper due diligence of your investors’ resources and networks
Keep checks on how your advisors and investors encourage/ dissuade innovation and risk-taking
Make sure that you surround yourself with a variety of perspectives, and ensuring that your social buffer is not counterproductive to your innovation and external orientations

Cheers.

Building your brand

This is not a post about marketing, though it may sound so. This is a post about how entrepreneurs and leaders communicate. This is relevant for brands and firms as well. Read on.

I listened to a very insightful TEDx talk by Simon Sinek on inspirational leaders. Listen to it here. He talked about how inspirational leaders focus on the inner most ring of what he called the golden circle. In the inner circle is the why, followed by the how, and then the what. He cited examples of ineffective communication, when firms and brands and individuals focused on the what to drive the how and why, and how successful people and brands and firms focused on the why first, before highlighting the how, and what. If you have not listened to it yet, please do so, before you proceed.

As we see a tramline of enterprises biting the dust, liquidating/ selling off to powerful competitors/ selling off at a fraction of its past valuations to firms in complementary businesses, this message is becoming far more relevant. Couldn’t resist this contrast …

Yahoo is a guide focused on informing, connecting, and entertaining our users.

https://about.yahoo.com/

Google’s mission is to organize the world’s information and make it universally accessible and useful.

https://www.google.com/intl/en/about/company/

Just take a look at how these two pages are organised – Yahoo’s page flows like this – a statement of what they do – inform, connect, and entertain; how did they start, how is it to work for Yahoo, and what does it offer for developers, advertisers, partners, and research. Google’s page begins with the company overview (that includes their history), who they are (culture and locations), what they believe, and then what they do.

If your communication focuses on what problems you solve (why you exist), and then lead towards how you solve those problems, and therefore what products and services you offer; I am willing to listen to you. On the other hand, there are entrepreneurs and firms that begin with what they do. For instance, early this week, I heard someone talk about building the Uber of Indian tractors for farmers (if the one who talked about this is reading this, don’t take it personally). I had to probe deeper and deeper to understand what problem was being solved and why did Indian farmers needed a mechanisation solution in the lines of Uber.

Virgin’s Richard Branson also wrote today (11 August) about why successful entrepreneurs should seek problems, and create solutions (read it here). Begin with the problem and the opportunity; the business model and the solution will follow; and thence products and services.

So, whatever brand you are building – of yourself, your firm, your products/ services, please begin with the why, the how, and then get to what. Build a robust brand that stands for something, signifies why it exists, and speaks to the ecosystem on why it exists. Remember the arrow that connects A and z in the Amazon.com logo? Everything from A to Z.

And in today’s world, as firms simultaneously diversify and depend on a cluster of complementors to provide (each others’) customers with unique value, it might not be out of place to conceive of your brand as a platform. A simple platform (like how the automobile companies use the word) upon which your complementors and partners could build on, customise, co-develop, co-innovate, and co-create. Brian Monahan’s post titled “More than a promise: Brands are platforms” (read it here) develops this argument very well. Brian’s primary argument is that brands transcend the promise and should allow for other firms and its partners to shape the consumer experience. Imagine brand Android!

Borrowing the idea from Simon Sinek’s talk, leaders communicate why more than the what. How is your brand communication structured?

Would love to listen/ read/ hear about your brand stories.

Obliquity – muddling through in entrepreneurship

Through my travel to the other side of the world last week, I read a couple of books. One of them was Obliquity by John Kay. The subtitle of the book reveals more than the title – why our goals are best achieved indirectly. In this post, I intend to build on my reading of the book, adapt a few ideas, and draw implications for platform-business startups. This is not an exhaustive review of the book – there are a lot of them available online; rather this is a summary of my notes from the book, which I thought was relevant for entrepreneurs.

What do you pursue?

The book builds on an intuitive understanding that relentless pursuit of anything does not take you where you want to go; as much as reaching there obliquely. Happiest people do not pursue happiness, and are happy because they do not actively pursue happiness. They enjoy what they do – their work, their roles, their chores, and are even not sure their activities will lead them to happiness. If you have not yet seen the movie, The Pursuit of Happyness, see it now. It is the experience that matters, not so much the outcome. Successful entrepreneurs startup to solve a world problem, at least something they faced themselves, and not make tons of money/ billions of dollars of valuation. Those that actively play the valuation game – yes I call it a game – do not optimize. Those who are constantly looking for exit options have not been successful. The book is replete with examples of firms whose intent to make money, and how they floundered.

Eudaimonia

Drawing on Aritstotle’s concept of Eudaimonia, Kay classifies three levels of purpose people and firms pursue. The lowest level is those of momentary happiness – like waving at a child smiling through the school bus window; the intermediate level may include a persistent sense of well-being, like a good holiday with family and friends in the Andamans (I have not been there, yet!); and the higher level of pursuit is what is referred to as Eudaimonia, something like the satisfaction of having a patent granted. Something that is fulfilling, achieving something that tells you that you have reached your potential. When I teach strategy introduction sessions, I draw upon vision and mission statements of a variety of (successful) firms to speak about how these statements are actually altruistic and ephemeral, conveying a larger sense of purpose. Consistently, firms that add shareholder value in their vision/ mission statements have faltered, to either rediscover themselves or bite the dust. So, entrepreneurs out there, what is your Eudaimonia? Appreciate that in ancient Greek philosophy (we are approaching the Olympics, right?), “the final end of action is realised in action, and is not a consequence of action. Eudaimonia is a goal set before each agent as soon as he starts to act; it is not chosen and cannot be renounced.” Define why you are in business, and what is your high-level pursuit?

Obliquity in problem solving

Okay, solve this brainteaser for me (cited in page 50-51 of the book). A man sets off walking a mile to his home from his work. As he starts, his dog sets off to meet him on the way, and when it finds him, licks his hand and returns back home. And continues do so (run towards the master, lick his hand and return back home) till the master and the dog reach home together. If the man walked at a speed of three miles per hour, and the dog at twelve miles per hour, how much distance did the dog cover?

You can calculate this distance using the principles of infinite series, but that would be a long-winded calculation. If any of you noticed, the dog was four times as fast as the master, it must have walked four times the distance the master walked in the same time, viz., four miles. This is what Kay refers to as oblique problem solving.

Oblique is simple, direct isn’t. What problems of your customers, partners, stakeholders are you solving? And how – directly, or obliquely? When Tally (www.tallysolutions.com) began selling computerised accounting solutions way back in the 1980s and 90s, their mantra was simple – keep the user experience simple, which translated into replicating the offline processes exactly in the online product. The trial balance looked the same, the ledger entries looked the same, and the end result was that every accountant was already familiar with Tally, when he finished his accounting degree. The “power of simplicity”, which incidentally is their corporate punchline, arose from their intent to not simplify the lives of the accountant, but to exactly replicate. Had they begun simplifying, I am not sure they would have attained this iconic status (and market share) amongst the millions of Indian small and medium businesses (SMBs).

Muddling through

People familiar with academic research on Organization Behavior would have heard of this term “muddling through”, first articulated by Prof. Charles E Lindblom in his seminal paper, “The Science of Muddling Through” (see the paper here). Kay concedes that obliquity is a (better) euphemism for muddling through, and elaborates on how goals, decisions, and actions are different across the direct and muddling through approach (see figure 7 in page 66-67 of the book). A quick summary for the not-so-academically inclined: muddling through represents a state where (a) goals are multi-dimensional and loosely defined; (b) goals evolve over time, in fact, even after the action has begun; (c) the external environment is complex – the structure of relationships is continuously evolving; (d) interactions amongst stakeholders is socially constructed; (e) the external environment is not known, and is uncertain; and (f) the range of events, and therefore the options available in front of the firm/ decision maker is unknown and uncertain. In such a complex and uncertain environment, decision makers engage in “successive limited comparisons of non-comprehensive actions”.

Entrepreneurs do engage in a variety of muddling through. We talked about pivoting and bricolage in an earlier post in this blog (Pelf). As the environment you encounter is uncertain and/ or complex, you are entitled to muddle through! However, do not lose sight of the higher level pursuit, your Eudaimonia. In the absence of the larger sense of purpose, muddling through will remain just that, and not lead you to your ultimate pursuit.

Ex post justification of random outcomes

Kay discusses in detail about how England footballer, David Beckham could “bend” the football, performing multi-variable physics calculations in matter of seconds as he takes a free kick (read a wonderful reporting about it in The Telegraph here). I am not convinced (like Kay) that David indeed did all those calculations, or did Wasim Akram and Waqar Younis, the early exponents of reverse swing in cricket seam bowling, or even exponents of the ‘legal’ doosra or carom-ball deliveries in spin bowling. They had some idea, tried something, experimented, experienced a difference, persisted, perfected and professed (subsequently). Ex post justifications, all of them. A lot of entrepreneurial successes and failures are also subject to the same phenomenon. Now that a famous startup firm has sold out, all the arm-chair analysts will bring out their own analyses on why they saw this was coming. Search on the Internet about the merger of Uber China with Didi Chuxing – you will find a lot of ex post justifications on why this was waiting to happen. There are relatively very few insights/ posts of what that means for other competitors, and how Lyft, Ola, or Grab would feel the impact; or even why Didi Chuxing decided to buy out a competitor so small in size and give its shareholders a share of their own pie. So, when you encounter ex post justifications, just concede to randomness, reflect to learn (you use the rear view mirror of the car to drive forward, right?), and continue forward.

So, in summary, entrepreneurs of today, define what is it that you pursue, what are your higher level goals, and what is your Eudaimonia. Appreciate that obliquity in decision making is here to stay and be prepared to muddle through the environment and indulge in some arm chair ex post justifications of performance.

Shameless self-promotion

By the way, if you are in Bangalore and are available on Saturday, the 6^th August 2016 forenoon (0950am onwards), you are invited to attend a panel discussion I am moderating on “Network Mobilization in Platform Business Firms” as part of the IIMB’s entrepreneurial summit, Eximius 2016. For more details, please visit http://eximius-iimb.com/4startupsnsrcel/. Free, mandatory registration at the website.

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Types of failures

Learning from failures

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