Archive for February, 2006
Gone are the times where Main Stream Media (MSM) only could dictate what was good and what was not. Blogging and citizen journalism have brought a totally new culture of participation. But what about TV which is considered the most influential means of media which is still mainly in the clutches of overpaid and overhyped programme directors? Maybe no longer.
“… with the upcoming launch of Democracy Player, the final component of an open video access and publishing platform that truly allows anyone (on Macs and PCs) to view, vote, subscribe, show, share, publish and distribute video-based content online at no cost at all.”
That sounds really exciting, add some Skype-like functionality to that, then the barrier between individual 1:1 or 1 to few towards one to many and many to many-communication would ultimately get blurred.
Still strongly under the impression of this great NASSCOM conference in Mumbai, I made up a couple of thoughts about the presentation which Prof. Michael Cusumano from the Sloan School of Management at MIT had held on Thursday.
Empirically, Mr. Cusumano made the case how over time the business model of software companies has evolved from a license-driven product to a mix of licenses combined with revenues from maintenance and services. He calls this a “hybrid model” which leads to higher market evaluation and generates incremental and more robust profits. See one of his charts where – at a certain stage – the crisscrossing takes place and the revenues for services overtake those for licenses.
Obviously, the two main drivers for this development are commoditization of software and, what product companies call the “death of software”: Open Source. In this context, making money purely by licenses is a risky, if not impossible, game. Ray Lane from Kleiner Perkins, a venture capital firm, seconded this view when he explained two weeks back in Bangalore: “If you as an entrepreneur today call a VC in the Valley and present a pure license-based software model, expect the guy to hang up his phone.”
What the market demands is software at a low price, maybe even for free. But software is usually not something where “one size fits all”. Therefore consulting, process-redesign, implementation and maintenance bring the main chunk of value addition. Let’s get a step further and look at a “software-as-a-service” pureplay like Salesforce.com which is a web-based CRM-platform, based on a subscription model and with it’s slogan “No Software” a cheekily established brand. What salesforce.com had wisely done is leveraging the power of its own platform by building a tool-agnostic sister-platform Appexchange which allows other developers to host their own software-service and easily make money with it. In addition, this again allows for a whole eco-system of consulting and service providers who would be able to tweak and customize Salesforce.com and the other tools on the Appexchange platform for tailoring it specifically to the requirements of a customer.
Looking at software-as-a-service for B2C platforms like LinkedIn or openBC, these social networks often run a pyramid-like business model. Basic features are free, which is important to bring such a network over critical mass, whereas the whole array of features will be charged at a price X. What I strongly believe will be a huge opportunity of these services for both locking-in their members and rise in the value chain, is adding services in the real world to its portfolio and charging extra for it. Tying up with companies in the brick-and-mortar world with a strong brand and a value-added service could be one. And of course, me being 100 percent bullish on India, adding some services from an Indian BPO would be another. There is literally no limit to imagination what bundles could be designed from a secretarial service to research to your personal networking officer. I don’t believe that such an extension is yet on the radar of the management of these platforms, but in my view this is clearly a very, very attractive path to explore. What will matter, as usually, is building a neat, clear and easy-to-use package for the customer which he will gladly accept.
Thanks to Jeyavel who commented my entry from Friday, I got to learn that the inspiring speech of India’s President Dr. Abdul Kalam is online on his webpage, including the option to download the Power Point presentation he held. That’s a truly up-to-date and up-to-speed President.
Also, my next journey to an Indian bookstore, will for sure bring me to the shelf to buy the autobiography of this brilliant and humble man: Wings of Fire.
After being to quite a few conferences, there is not the slightest doubt that the NASSCOM 2006 was the best I’ve ever attended. Great agenda on outsourcing, offshoring, globalization and innovation. Where do you get people like India’s President Dr. Abdul Kalam, Thomas Friedman from “The World is Flat”, Azim Premji from Wipro, Vivek Paul from Texas Pacific Group, Nandan Nilekani from Infosys, Promod Haque from Norwest Venture Partners at one place, giving keynotes and after that being available for unconventional 1:1-talks. Then fantastic people to network with. Like on the second evening I was exchanging a lot of thoughts with Ajith Pillai and Sanjeev, CEO and Vice President respectively from Nous Infosystems, where later Jerry Rao, founder and CEO of Mphasis, joined for a chit-chat. And altogether a perfect organization from Nasscom, and what I appreciate more than anything else and something that money can’t buy: The sincere and warmhearted Indian hospitality.
So the last evening was full in line with all the other program of the Nasscom 2006 and set a dignified final for this unforgettable event. And the organizers did it again: outperforming their own standards by being able to make a very special location available for the final party. The Indian Navy Ship “INS Vikrant” which had served as an essential aircraft-carrier for India in a conflict with Pakistan and brought pride to the nation. This vessel is out of service and has been re-purposed into a museum-ship for the public in the navy harbor of Bombay (Mumbai).
On deck, Nasscom had installed a stage with a fantastic show with obviously an ensemble of western dancers. Their show was among the most explicit which I have so far seen in a rather conservative India and I was not sure where all the wives of the CEOs present felt too comfortable seeing the female dancers presenting their underwear. As one can imagine, I did not really bother about that detail too much. And the show from the artistic standpoint, was absolute outstanding, too.
As usually, on an event around IT & BPO, the female participation among the delegates is usually miserably underrepresented. Therefore, I felt more than privileged to meet two both extremely smart and beautiful ladies whom I managed to convince for a picture together with me. I had to promise, if I blogged it here, that I would duly add: “ONLY FRIENDS!”, “NOTHING HAPPENED!”, “PURE; PRIM, PROPER & PLATONIC!” :-)
To my left, Hlubi Mtimkulu from South-African SACCCOM and to my right, Anupam Ahuja from Channai based Officetiger whom I named “Pearl of Africa” and “Pearl of Asia” respectively. So, even for the nerdy me this picture comes as an unprecedented kiss from destiny, something I can show off with to my male comrades and the foundations to receive heavy beatings from my girl friend ;-)
Want to watch the President of an important state coming with a notebook and prepared Power Point slides? Want to see how he can by heart quote numbers from the comprehensive McKinsey study for the Indian IT industry not failing to add with a grin like a happy child: “I was lucky to get it fr free.” Then running through his presentation which becomes technically very sophisticated, elegantly weaving connectivity-bandwidth over satellite and cross-over joint ventures together to a vision of a global knowledge platform? Want to see a warm, friendly and non-assuming statesmen? And who finally apologizes for his only limited time at the Nasscom-conference, but refers to his website and requests that questions be sent to him by e-mail promising that they “will be answered within 24 hours.” Welcome to Dr. Abdul Kalam – The President of India. Although I presume this joke has been cracked in his context many times: Going through these numbers for the IT-industry is certainly not rocket science for someone who has done exactly that for his entire professional life, namely conceiving the Indian nuclear missile as the most decorated rocket scientist in the country. Dr. Kalam himself, due to fog at departure in Delhi delayed for one hour, who gave an impressive keynote today at the last day of the NASSCOM 2006 India Leadership Conference.
The Indian IT industry with growth rates in – to stay in the picture – skyrocketing 32 % will achieve in the financial year 2005/2006 an export volume of 32bn and is supposed to hit an impressive $60 bn by 2010 according to the mentioned McKinsey study. Not enough, according to the President. “Aim high, so I want to market to you to reach by 2010 a volume of $200 bn.” That’s ambitious, to say the least, and produced visible gulps among the present industry captains for whom the $60bn goal already appears very ambitious.
Dr. Kalam of course did not leave it to the vague. In his view the power to achieve such a rise lies in increasing the GDP growth rate in India from 8 to 10 % and unleashing the power of the tier 2, tier 3 cities and even villages by bringing internet connectivity to them and educating the workforce who could effectively write software code from there. In the “Flat World”- nothing totally inconceivable.
In a short Q&A-session, a delegate asked how such stretch goals could be achieved. The President replied that there were three answers: “First: I can do it!”. He paused. “And second: I can do it and third: I can do it!” Chapeau, Mr. President.
Keynotes belong to the big guys. Yesterday it was Azim Premji’s turn, the CEO and 80 % owner of Wipro which makes him the richest Indian in India (till one year back he used to be the richest Indian in general before London-based steel-baron Lakshmi Mittal took over). As he is renowned, extremely modest (“Wipro, a company which is doing reasonably well”) and soft-spoken he opened the day whose entire thread would spin about the word which seems to driver the Indian IT-industry in 2006: The “I-“Word.
In his amazing clarity and alertness which is the living evidence for his success, Mr. Premji let no doubt that a lack on innovative thinking is lethal for any company. As entrepreneurs do, he made a clear distinction about creativity as “thinking new things” towards innovation as “doing things differently by applying thought” which includes design, implementation, in the bottom line: action.
Innovation, that was a valuable point, extends by far beyond coming up with a great new cutting-edge disruptive ha-hoo product like Skype. Innovation can happen and contribute incrementally in the areas of delivery, process, business model, supply chain and something which gets underestimated: organizational structure. Innovation won’t come by itself; there is the urge to create a culture of innovation in an environment of trust and without fear.
Amazing again on Premji’s side, a gentleman who will turn 61 this year, is his relentless power to keep on moving. The biggest enemy of innovation is the tendency to believe that previous success will extend into future success. Also, the “constant complacency which tends to spread in the top- and mid-management” needs to be confronted to avoid the resulting gravity which will put a damaging drag on the organization. What I could realize at many stages of his speech is his great leadership by immediately coming up with tangible, actionable remedies in a very systematical, even methodological way. “What we actively do in our hiring, we select a defined percentage of people who are not clones of other people in the organization. People from outside who will provide the necessary diversity, talent which makes it slightly uncomfortable for the incumbents and basically do not fit into the current culture.” That is a hammer. “A defined percentage” which allows the system to stay well intact but at the same time constantly evolve.
Premji underscored the commitment to innovation which must be intrinsic from the top-management beyond just allocating financial resources, the supremacy of teams working together, a multi-faceted, cross-disciplinary approach and the ability to fight constructively if a new idea can really turn into an innovative asset. Wipro apparently has installed an innovation counsel which is structured pretty much as an internal VC fund.
Finally, Mr. Premji concluded that true innovation has to allow for failure. Quoting a Nobel Prize winner, he summed up with: “I try to fail as fast as I can to move on for the next idea.”
The highlight of the conference proved to be the super-highlight of the conference: Thomas Friedman live. I only knew that he’s an exceptional writer, now I know that he’s an exceptional orator, too. Speaking without notes, he is extremely present, very clear and great fun to listen to. We all knew that the world is already flat, but he went further and declared that this development was the “mother of all inflexion points in history”. But first things first.
Who has not read the second-best book of my life “The World is Flat”; do it. It’s a must. Thomas explained how the overall idea came up: Being a columnist of the “New York Times”, he decided to spend some time in a Bangalore call-centre to address from that perspective the question after September 11th why the world hated America. There he realized that not just his PC-support calls would be handled from Bangalore, but also his tax declaration, his lost luggage from Delta Airlines and his X-Ray examination. He asked himself: “What did I miss?” Interviewing Nandan Nilekani, the Infosys-CEO told him: “Thomas, the economic playing field between India and the U.S. in being leveled.” – The playing field of the world had leveled. The world is flat.
Friedman went to explain his three phases of globalization:
• Globalization 1.0 between 1492 to 1820 A.D.: You went global though your Country which was the agent of the development.
• Globalization 2.0 between 1820 to 2000 A.D.: The Company, full with cash to fund marketing and sourcing activities, went global in quest for further profits.
• Globalization 3.0 from 2000 onwards: The Individual has received access to the global field; think of yourself as a company that can interact and transact with another 3 billion individuals. Cool, exciting and terrific.
I don’t want to go into detail to repeat all “10 Flatteners” from his fantastic book. Friedman does it anyway much better; also you should preserve some surprising momentum when reading yourself. Yet, clearly, the internet and then the internet and finally the internet is the driving force behind. Together with aspects like the fall of the Berlin wall, the launch of Microsoft Windows as a common technical platform and the massive overinvestment into fiber-optic cables during the dot-com boom a connection between Boston and Bangalore has become as cheap and commoditized as if it was just around the corner.
Initially it was about the internet first connecting people in a 1:1 context by reading simple web-pages or exchanging e-mails. Then with the advent of protocols like XML, SOAP and REST the ability evolved to let computers across the globe talk efficiently with each other. And what do we have today? The ability of downloading stuff has evolved into a culture of uploading: Everyone can upload his own content, like I am doing right now in my blog, or podcast for audio/video or collaborating on a knowledge platform like Wikipedia or create jointly an open source piece of software. The flow of creativity has changed forever. All the flatteners converging to a joint tipping point, plus being boosted by “steroids” like wireless, Voice over IP, instant messaging, they pick up a self reinforcing momentum of unprecedented, turbo-boosted scale and form this global web-enabled platform in front of us. Something feels different today than it did just a few years back for the millennium change.
The system has disintegrated. The ancient command-and-control structure between the individual and the company has been replaced by a horizontal structure where it matters to whom you connect to. The infrastructure to do is in place, what is necessary is the right education. Here it really got exciting, because Thomas Friedman started to go beyond his book and explained what it takes to be and especially to stay atop in an ever flatter world where you end up competing with another 300 mn people from India or China who have just stepped on the global scene. What does it take to become, in a sort of reverse caste system, an “untouchable” whose job is safe and cannot be automated, digitized or outsourced? Unless you are not “special” (like Madonna or Michael Schumacher) or “specialized” (top-notch brain surgeon or fashion designer) or “local” (hairdresser or construction worker) you might fall into the category of the “New Middle” in between. According to Friedman, there are eight types that describe this new type who will always stay one step ahead of the Pac Man who wants to eat his job:
1. Great Collaborators: Infosys receives 9,000 applications every year from top-students of US-universities who want to spend some time in India. These guys display the will to extend their reach far beyond cultural barriers and time zones and understand the mechanisms of the flat world.
2. Great Synthesizers: A + B = C, like Steve Jobs did with Software + Service + Hardware = iPod and iTunes. Mashing up stuff like Craigslist with a Google Map overlay.
3. Great Leveragers: Using the power of technology so that 1 can do the job that previously 20 were doing.
4. Great Explainers: Teachers, managers, politicians and journalists explaining the complexity and providing orientation in a flat world.
5. “Anything Green”: Everyone who comes up with solutions for energy, cars, refrigerators which will avoid in the arrival of 3 billion new consumers from India, China, Vietnam that we break-up and smoke-up this planet in the blink of an eye.
6. Great Localizers: Driving small businesses for your imminent eco-system from a global platform, e.g. someone in India building a retail business on eBay. (Basically, good idea, but be careful about the margins which might collapse as fast as you can think as everybody else can execute the same idea. I know what I am talking about: This is effectively what brought me to India and it stalled terribly.)
7. Great Personalizers: Adding the yummy strawberries on an otherwise unsexy vanilla commodity. A salesman for lemonade in front of a football stadium, whom his funny personality makes rather an artist than just a salesman.
8. Great Adopters: Versatilists who are able to accommodate in fast-paced changing environment. Imagine you are training hard for the Olympic Games but you have no clue in which discipline you are going to compete.
So, what do you have to do to develop one or some or a little bit of everything of these concepts? Friedman is very clear: Learn how to learn. Education is not a place, it’s a process – a lifelong process. Yet, don’t become a nerd, better play well with others. It’s a right-brain world, where the left side, e.g.mathematical side of the brain, will be taken over by much faster computers. The right brain, however, is about collaborating, synthesizing and integrating.
Friedman’s ultimate success formula: CQ + PQ > IQ which translated in to “Curiosity Quotient” plus “Passion Quotient” is always bigger than “Intelligence Quotient”.
For his outstanding steroid-turbo-charging-boosting effect for the Indian offshoring industry, Thomas Friedman received the Nasscom Global Learship Award, here on a picture together with NASSCOM-president Kiran Karnik.
Arrived to Mumbai (Bombay) this morning and headed straight to the venue, the Grand Hyatt where the organized NASSCOM does an outstanding job in terms of smooth organization of the India Leadership Event. Here the view from my hotel room into the everlasting heat of this Maximum City.
Even now sitting in the conference hall, wireless LAN keeps me connected so that I can virtually blog in real time. First session was about Europe –“The Next Big Opportunity”.
The major angles from the panel:
• There is no doubt that predominantly Europe is this next big opportunity for Indian IT-companies who possess the right scale, size and global footprint to bring their operations to the next level. It is more of the right mix of strategy and execution, as particularly German and French companies are still quite fuzzy to send work to India.
• Approach number one, the most obvious, apply the rigor of your established processes and grow organically by also hiring significantly from the local market. How one of the panelists put it candidly: “Local Presence with the Indian Package”.
• Approach number two, go through the M&A-route to grow faster but be prepared to deal with backlash on the existing customer-base as well as top-talent leaving the company. Put all effort in a smooth integration and develop career opportunities for the local staff.
• Be willing to invest significantly into cultural training to bridge the gap into a territory like France or Germany where the notion of Indian culture is way less than e.g. in the U.K.
• For the SMB, look out for a partner to help you on the ground. Otherwise the cost of acquisition for a new client might become prohibitive. Small can be beautiful if the company has a niche where it has specialized in.
• Furthermore, it might make send if you are not yet so experienced dealing with continental Europe to follow one of your customer to jointly roll out a product. In that scenario, the customer delivers some sort of incubator function.
After that, had a great lunch in the atrium of the hotel where I happened to stand on the same table with Simon Long, the Head of the South Asia Office of my most favorite publication “The Economist” where we had a little informal chit-chat.
That’s the greatness of conferences: You get to hear great things and you network with very exciting people. And the digital lifestyle enables me to simply share this experience online. More to come soon.
Today has been – what I totally dislike – hectic with doing too many things at the same time. It reminds me of Dostoyevski’s proverb: “Who hunts too many rabbits at the same time, will not catch a single one.”
One of the things on my plate is the preparation for eparture tomorrow to Bombay (Mumbai) to attend the India Leadership Forum organized by the Indian IT-association NASSCOM. I am really looking forward to it as Thomas Friedman, the author of “The World is Flat” will have a keynote speech and will put forward his update on how the world has changed, particularly with respect to offshoring and outsourcing. In that context, I was wondering what to answer when people ask me what I was doing. I guess I found the answer that brings it to the point: “I help making the world a flatter place.” Hope to be able to post some insights on how the conference is going here on my weblog.