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Friday, July 29, 2011

Startup Enablers: Crowdsourcing

7:26 PM Posted by Deepak Nayal No comments
This is the third post in the Startup Enablers series. The first two covered key enablers that have helped accelerate the growth of startups and cloud computing as an enabler, respectively. This post is about crowdsourcing as an enabler.

Crowdsourcing is about outsourcing a task to the general public, a community or a group of people. So, for example, if a company wants to launch a marketing campaign, it can reach out to general public through let's say internet, involving people in creating the campaign and then promoting it through their respective networks. And so a task which is generally done by a team of people or an agency, is now done by tapping into the talents and tastes of the general public. All of us use crowdsourced products in our daily lives - Wikipedia is probably the best and most commonly known example; multi-national FMCG companies use crowdsourcing for product launches and marketing campaigns. Crowdsourcing has been a common thing in technology industry for years. The whole opensource movement is a kind of crowdsourcing, in which technical minds from all over the world collaborate to develop software applications. In fact, technology industry has taken it a step further, and now it is common for companies to expose the functionality of their products as APIs so that other developers can create their own applications on top of it, creating a community around the original product.

The stupendous growth of internet and advancements in web technologies have been the biggest benefactors in the rise of crowdsourcing, as now more people can be reached out and can contribute to online initiatives. With time the impact of crowdsourcing will become even greater. It has proved to be very useful to organizations, as it can lead to implementing projects faster (more hands), cheaper (free or nominal amount) and with better quality (more eyes watching). It is these benefits of crowdsourcing that can prove to be very beneficial for startups - which are generally short of time, money and resources. An organization/startup can get a lot of its requirements crowdsourced - from data mining and forecasting (Kaggle) to branding (Brandtags) to designing (99designs) to software development (Topcoder) to even fundraising (Kickstarter). In addition to that, crowdsourcing can also be leveraged as a business model. The companies mentioned above have already utilized the power of crowdsourcing in their innovative business models. One of the greatest recent commercial startup success stories, AirBnB, is a excellent example of crowdsourcing.   

In addition to the crowdsourcing version used in software industry, another fascinating version is used in the field of funding and is [surprisingly!] called crowdfunding. Crowdfunding is about getting your project funded from general public or community, instead of just a handful of investors. Some of the most successful crowdfunding platforms are IndieGoGo and Kickstarter. These [and other] crowdfunding platforms have helped thousands of projects raise millions of dollars to fund their activities. Crowdfunding is a fascinating model as it has the potential to become one of the primary sources of financing projects in future, decreasing the dependency on more traditional sources of investment (such as banks, lenders and, to some extent, angels and VCs). As more startups get funded, more products and services get generated, eventually adding more value to the economy. 

Power Of Masses
Crowdsourcing is the game of masses, and so it has even greater potential in large developing and populous countries, such as the BRIC nations. Currently around one-third of the world's population lives in China and India, however, they have internet penetration rates of less than 30 and 10 percent respectively (as of 2009). Considering that scale is the most important factor here, imagine what will happen when these emerging Asian giants reach the internet penetration levels of their advanced western counterparts. Let's compare two of my most beloved countries - I am a citizen of one and resident of another - to give you some perspective - 

source: CIA Factbook

Population (est. 2011)
+62 million
+1180 million
Internet users (2009)
+51 million
+61 million 
Internet penetration (internet users/population
80-85 percent
6-8 percent

The figures for internet users are relatively old here, but as you can still see the potential of crowdsourcing for growing economies is massive! India with just 6-8% penetration level still has almost the same number of internet users as the entire population of UK. Let's workout a hypothetical crowdfunding scenario in India with only 10% internet penetration to understand the potential of crowdfunding.

+1180 million
Internet users (with 10% penetration)
118 million 
Crowdfunding volunteers for a startup (~5%)
5.9 million
Average amount given by each volunteer
INR 1 (less than 2.5 US cents)
Total amount raised (1 USD = 45 INR)
~USD 131,000

That is a lot of money for seed capital for most of the startups! In case you have not noticed, this scenario is hugely underplayed as far as internet penetration (10% !?) and average amount raised are concerned. To give you an idea, we have taken an average amount to be less than 2.5 US cents here, while average pledge in Kickstarter in 2010 was more than USD 70. As this scenario shows, increased internet penetration when combined with crowdsourcing can do wonders for the startup community in these emerging Asian giants. 

Startups Will Lead The Way
What makes crowdsourcing so effective is that it harnesses two great powers/ideologies - openness and masses. Though crowdsourcing is not very common even today, I believe startups will lead the way here and will come up with game-changing business models, leveraging crowdsourcing, that will grow much faster and will have far greater impact than their larger established competitors. I have especially high hopes from emerging economies, such as BRIC nations, as their large populations and fast economic growth will enable crowdsourcing to generate greater benefits not just for businesses but also for the people. 

Sunday, July 24, 2011

Why Is Interest Graph More Interesting Than Social Graph?

7:52 AM Posted by Deepak Nayal 3 comments
Social networks have evolved over the years and have now become as important and necessary, if not more, as emails. Few years ago when we used to log on to internet, the first thing we used to do was check our email accounts. Now when we log on, we still check our emails, but a lot of us check their social networks first: Facebook, Twitter, Linkedin, etc. 

Social networks are essentially graphs, where entities (people and organizations) are nodes, and relationships and interests are links. Though a lot of people think of all social networks as the same, these are very different - usually differentiated by their underlying graphs. The usual [simplistic] view that people have of social networks is actually that of a social graph, where people are nodes and relationships are links. So, for example, in my social graph I will be connected with my friends, family and acquaintances. I will share photos, messages and news with them, and they with me. Though this is all great, there is a fundamental constraint with the social graph - it covers the world around me, but not much of me. Our world is much more than our family and friends; it is also about our interests, thoughts and beliefs. It is these traits that define us as an individual. The social graph is not able to capture these things. Enter interest graph.

The Interest Graph
In the interest graph, entities are not connected through relationships, but through interests, beliefs and causes, such as a particular subject, event, celebrity or organization. The great thing about interest graph is that, unlike a social graph, I do not need to know you in order to connect to you. This brings out the subtleties of human nature. It is quite possible that you do not share your interests and ideologies with any of your family members or friends, but have similar interests and beliefs as a stranger living in another country. While social graph articulates your existing network, interest graph extends it. 

The two most prominent social networks, Facebook and Twitter, have elements of both, social and interest, in them; though, Facebook is primarily a social graph and Twitter is primarily an interest graph. Other examples of interest graph include Digg, Quora and RSS feeds. Thanks to the popularity of Facebook, social graph has got a lot of attention by general public and companies; however, I believe interest graph has got much more potential in comparison. Good for Facebook, they have realized this as well, hence the fan page, like and comments features. But the problem with Facebook is that it was built with social graph in mind, not the interest. 

Impact of Interest Graph
The impact of interest graph and possibilities around it are far greater than the social one, not just for you (an individual) but also for society and companies. 

At the individual level, it allows you to express yourself, and connect with people and organizations who either are from the field of your interest or have similar interests. While you might like chatting to your friends about your trip to Malaysia or commenting on their photos, but you might be more interested in the Euro crises, green house effect, Lady Gaga's concerts, Vogue's spring collection, iPhone 5 or new pair of running shoes from Nike. You may want to know about these things, talk about them, share your opinion and gets others' - but your friends and family might not share your interests. Your social graph might not be the best place to share these things, you need an interest graph for that. You will search blogs on the topic of interest and comment on the relevant articles, find discussion boards, look for people who are considered experts in these areas and seek their opinion. It might seems trivial at first, but remember, it is the human desire to explore, express and communicate that has brought this world various movements (such as the Renaissance) and revolutions (such as the recent Middle-East uprising). This is the greatest strength of interest graph - connecting people with a cause, bringing a sense of purpose and achievement. 

Interest graph can also do wonders for commercial purposes. Companies can tap into your interest graph to find out more about you, and then present you with offerings more useful and interesting to you. Imagine, as soon as you walk into a mall, its system gets your identity, taps into your interest graph and finds out that you like Italian cuisine and have been following developments on new gaming consoles. Based on that it can tell you that there is a games shop on ground floor which is offering XBox games on discount and an original Italian cuisine restaurant on second floor. Or you go into a sales meeting and are introduced to a client director you did not know was going to show up. You open up an app on your iPhone, which analyzes his interest graph and tells you that the director values green initiatives a lot and is interested in cloud computing. The interest graph becomes a potential gold mine for companies when it is combined with location tracking (to find out where you are) and big data technologies (to analyze huge amounts on data faster). It has the potential to truly connect the online and offline worlds. 

This might all seem too futuristic, but all this has already started to happen now (check out Loopt, Color and Gravity); Walmart is already exploring Twitter to analyze trends so that it can stock up products in its stores according to local usage. The world has become a small place and the interest graph has the potential to make it even smaller. Though the social graph is a great way to connect with your loved ones (and also the not so loved ones), the interest graph has much greater potential to change the humanity for good, and impact our world at commercial, social and individual level - the interest graph is much more interesting. 

Wednesday, July 13, 2011

Startup Enablers: Cloud Computing

9:32 PM Posted by Deepak Nayal , No comments
This is the second post in the Startup Enablers series. In the first post, I briefly talked about some of the key enablers that have helped accelerate the growth of startups. While writing that article I realized that there is more I wanted to write about for each of the enablers, but doing so would have made that original post much lengthier. So I decided to cover each of those enablers in a separate post. This one is about cloud computing.

I am not going to explain cloud computing here; a lot has already been written and discussed on it. The purpose of this article is to share my views on how companies, especially startups, can leverage cloud computing. The reason I am emphasizing here on startups is that I believe they have been, and still are, the biggest disruptive force in any industry. This is particularly true in the technology sector. So while everything I am saying is applicable to all companies, both big and small, I think startups can leverage cloud computing a lot more than their big and established counterparts.

Companies can leverage cloud computing in two ways: operationally - when a company is using cloud computing for running its own operations - and product-wise - when a company is providing cloud based offering to its users.

Cloud For Operations
Before cloud computing was widely used, companies used to either buy server space from hosting companies or buy their own servers to host their applications. The key problem with the first approach was that the space assigned was limited and you could not scale up quickly based on the server load. Generally companies/people who were interested in just some kind of web presence (and not heavy processing) went for this option. The problem with the second approach was that you had to invest a lot of money upfront, with no guarantee that users are going to show up, and you could not scale up based on the increase in load. In addition to that, extra effort was required in maintaining and tuning those servers.

Cloud computing solved all these problems related to scalability, cost and effort. You do not need to buy servers upfront and can just use some resources on the cloud, and if more resources are required the "cloud environment" can scale up to accommodate that requirement. In addition to that, you are not required to maintain those servers. No resource commitment; you only pay based on you usage; technology capital expenses are converted to operational expenses - CEOs love it, CFOs not so much. It is an excellent solution for companies.

Though cloud computing has been around for many years now, it has caught public attention only in the last few. Primarily because various consumer side companies with massive data and processing requirements have adopted the cloud, strengthening its image. With companies such as Apple, Zynga, Foursquare, and Microsoft, backing up cloud computing by using it for their key operational use, other smaller businesses can easily trust it for their operational requirements. Companies can leverage it for setting infrastructure (Amazon EC2 and Microsoft Azure), developing applications (Heroku and PHPfog) and using services (Salesforce and Zendesk). Using cloud computing allows these companies, especially startups, to stay lean, and focus on their core offering. 

Cloud For Products
We have just talked about leveraging cloud for internal/operational purposes. Cloud can do wonders when leveraged for consumer offerings, as it provides great benefits to end users - mobility, ubiquity, scalability, pay as you go and safety against data loss. Cloud should not be confused by the web though, because anything that is on web is not necessarily a cloud service. The benefits constitute a major part of it, and in addition to it the architecture and pricing are also important aspects of a cloud offering. Having said that, I think companies should not worry about technicalities of cloud computing and its features, and should instead focus on providing solutions - cloud based or not - to their end users. 

I believe what we are seeing in cloud computing currently is just tip of the iceberg. Cloud will achieve its final purpose when we actually stop talking about it; when cloud computing becomes a given; an expected basic functionality. Currently, people think of clouds as servers, applications, websites, and interfaces. Thanks to advancements in local, social, mobile and big data technologies, hopefully we are not too far away from witnessing a future with ever-present, omnipresent, intelligent systems. That is when a cloud service will not be just a website or an application, but a service that can be accessed anywhere, anytime and using any device, just like electricity. 

I think startups will lead the way in innovation here, with the established companies following them. Dropbox is a particularly interesting example here, with Apple following [and enhancing] on its footsteps with iCloud. Overall, cloud computing is here to stay. And hopefully, though the cloud computing concept will become main stream (and as common as a desktop PC), the term cloud computing will drop off the lexicon.

Saturday, July 09, 2011

Startup Enablers

1:02 PM Posted by Deepak Nayal No comments
Okay, neither am I the first guy to say this nor are you hearing it for the first time - this is an exciting and one of the best times to launch a startup. Not only has startup activity picked up in Silicon Valley, it has started to abuzz in other parts of US, Europe and Asia as well. The credit crisis has actually benefited startups. There has been an increase in talented people in the job market, and lots of employees have got disenchanted with their companies.
Though lots of startups have been established in various industries, there is no other industry that grabs as much attention and money as the technology sector. This is due to various reasons –
  1. Technology is a highly dynamic sector
  2. This industry is about creativity, innovation and user engagement
  3. It has great power to transform people’s lives
  4. It is a great equalizer. A small group of college dropouts, with a better product, can threaten the existence of an established brand
  5. And, most importantly, no other industry has and can create so much wealth in such little time as tech industry. Legendary Venture Capitalist John Doerr use to say, “Internet is the greatest legal creation of wealth in the history of the planet”. There is proof all around us supporting this statement: Google, Facebook, Twitter, Linkedin,, Zynga, etc.
Launching a startup (especially tech based startup) has become much easier and cheaper overtime. Several changes in technological and business landscape in recent times have considerably lowered barriers to entry for technology-based startups. So much so that a guy sitting in his apartment can start a venture that can threaten a global brand. Some of these changes have been so fundamental that they can be considered as startup enablers that can help entrepreneurs start and scale new ventures much faster and cheaper. I have tried to identify these key enablers that can help startups, especially technology ones, a lot in terms of saving cost and time. In case I have missed other important ones please do share them in comments. I will be writing about each some of these enablers in more detail in future posts.
  • Cloud Computing – I do not think the world has thanked Amazon enough for what the company has done in the field of cloud computing. Its webservices and cloud computing stack have had a much greater impact on the world than its core ecommerce business.
    Currently, the cloud computing landscape is full of different kinds of players offering a large variety of services and platforms that companies can use to run their operations or entrepreneurs can use to launch their startups. Thanks to cloud computing, organizations can convert their IT capital expenses to operating expenses, and only pay for what they use. Cloud computing also enables companies to scale up quickly helping them to compete with bigger and more established players.
  • New Technology Platforms – I was a small child (and unaware of the world around me) when Apple, Microsoft and Netscape were busy launching operating systems and browsers - new technology platforms. It must have been exciting times then. I missed that buzz, but what is happening now is even bigger than that. Developments in social, local and mobile landscape are life altering and breathtaking – John Doerr has named this trend SoLoMo. Each of these trends are led by industry shaping platforms in their respective fields: Facebook, Twitter and Linkedin in social, Groupon, LivingSocial and FourSquare in local, and Apple and Google in mobile. Many companies and developers are leveraging these platforms for developing new applications and launching new companies. These platforms have not only led to founding of various startups in developed countries, but also have also unleashed startups in the developing world.
  • Easier Access to Funding – With so many venture capital firms and angel investors around (in US and UK), it has actually become more competitive for these investor firms to get good deals. Every investor is trying to find the next Google or Facebook. With barriers to entry lowered, entrepreneurs can launch technology startups with little or no help from investors for seed capital. This can increase their bargaining power while negotiating with angels and VCs. In addition to that, there is another phenomenon that is helping entrepreneurs raise money relatively easily – Crowdfunding. A variant of crowdsourcing (covered below), in crowdfunding, startups/organizations get money from general public, without sharing equity or raising debt. Kickstarter is the leader in this space.
  • Incubators – A lot of incubators have also sprung up which are not only helping startups with funding but also by providing them help with legal, infra, IT and other issues, along with mentoring the founders. A lot of startups now prefer reaching out to these incubators first, before dealing with large venture capitalists. Y Combinator is clearly the global leader here, and has become a brand of its own like Standford or Harvard. Seedcamp and StartupBootcamp are strong players in European landscape. In addition to these incubators, projects such as TechHub and Techmeetups have also come up which provide startups with space to work and network with mentors and other startups.
  • Crowdsourcing – Crowdsourcing is also one of best things that have happened to startups. Crowdsourcing is about outsourcing a task to a large group of people (instead of a particular organization), who take these tasks up voluntarily (for free) or in lieu of a fee. Wikipedia is probably the best example of crowdsourcing. Crowdsourcing has huge potential, as it leverages skills and ideas of thousands, if not millions, of people. A lot of companies have come up that solve different problems using crowdsourcing phenomenon: funding (Kickstarter and IndieGoGo), skills (oDesk and Freelancer), content (iStockPhoto), ideas (OpenIDEO), design (99designs), etc.
These enablers mentioned above have allowed entrepreneurs to start and run their ventures faster and cheaper. However, these enablers do not guarantee success of a startup. The same old rules of game still apply for making a startup successful. The ones that do not follow these rules, end-up as soon as they start-up.

Wednesday, July 06, 2011

CFC - Key To Better Project Management

9:26 PM Posted by Deepak Nayal No comments
Any organization is like one huge project, which in turn contains many other projects (or programs). These projects can be in different areas or divisions of that organization - technology, marketing, finance, strategy, supply chain, manufacturing, etc. – and can vary a lot in complexity and nature of the task required to be done – building a new product, launching a new marketing campaign, running HR processes, implementing technology systems, integrating a recently acquired company etc. Good project management skills are important for running small projects as well as large organizations in any function and industry. But what exactly are these skills? Unfortunately, a lot of people consider these skills to be the more visible, tangible and measurable ones; however, it is the softer and intangible ones that matter the most.

Tools Help, But Do Not Matter
A lot of people associate project management with tools, such as Basecamp, Six Sigma, stakeholder analysis, Microsoft Project, Microsoft Excel, Gantt charts, status reports, etc.  Their assumption is that if one is good at using these tools, that person should be good at project management as well. I have seen many job advertisements, even from some of the well-known multi-national companies, where knowledge of these tools is an essential requirement for suitable candidates. In fact, I remember seeing a job advert long time back where the company even mentioned the Excel formulae that candidates were required to know!

I believe these people are focusing on the wrong area. Many people fail to realize that these tools are just means to the end, and not the end itself. These tools can help you organize your work and visualize things better, but they cannot solve project problems. A good project manager is a good project manager, irrespective of the tools. If he doesn’t have those with him, he will make something up or make use of something he has access to. Remember, a good project manager can make excellent use of bad tools, but a bad project manager will not be able to leverage good tools.

Certifications Do Not Matter
Just like many of you, I have interviewed many people throughout my career, and a lot of those boasted of various certifications on their CV. Here is one thing I realized long time back – the best people do not have a single certification on their CV. They do not get bothered with those things, because if you are good, you know it and you do not need to pay a company to let you sit through an exam to prove that. Now let me clarify here – some people go for certifications to increase their knowledge, but mostly do them for improving their CV. Latter can generally be seen in the services industry.

If going through books and sitting through exams would have made people good managers, then the world wouldn’t have been through the economic crisis that we are witnessing currently.

The problem with certifications, such as PMP and Prince 2, is sort of same as the problem with tools, because in effect while preparing for certifications you learn about tools and processes, which is that these are just means to the end. I have met so many certified project managers who miss out on basics of project management, run projects in silos, are bad in communication and create problems for their team and other stakeholders. My problem with certifications is that even though mostly people go for certifications to get a job or a better salary, and not because they want to become good managers, these certifications have become a barometer of project management skills.

Skills That Matter Most
Tools, processes, technologies do not matter because project management is not about managing resources; it is about managing people (unfortunately, in service industry, people are also referred to as resources). And because humans do not act in a defined and predictable manner, no amount of tools and technologies in the world can guarantee good project management.

Startups may not face project management issues (at least for sometime), as there are just a few guys (hopefully good friends) sitting next to each other, working on the same project. Everyone knows what he or she has to do and what the other guys are doing. But after organizations reach a certain size, they start facing problems in managing projects because there are many more people involved, much more dependencies and a lot of projects running at any given time.

Considering that people are the key to effective project management, it all boils down to CFC, i.e. Communication, Follow through and Collaboration. These are the three key reasons because of which most projects fail, and the three key skills that good project managers have.

Good project managers make sure that stakeholders are timely informed about project developments and that communication channels remain open and fluid. Lack of communication is probably the single biggest problem I have seen in projects, and a global workforce or outsourced business model (which is very common nowadays) makes it even worse. With various internal and external stakeholders involved in a project, keeping everyone up-to-date becomes very important and tough. But then keeping everyone updated with every project development does not help either and may lead to another problem - over communication. Too much information can lead to people missing out on important information in the stream of updates. This thin line between over and under communication is what makes managing effective and efficient communication a challenging task. In my experience, over-communication is the lesser of two evils.

Following through is probably the simplest of the three skills, but is still surprisingly lacked by many managers. A lot of times, either due to the number of tasks spawned or due to lack of manager’s interest (probably because of low priority), tasks do get assigned to people but are not followed through. Frankly, there is no straight answer to this problem, because tasks vary in priority, which can change more than once during the course of the project. I think the only thing a manager can do here is to make sure that he or she follows up regularly with the assignee. Regular follow-ups by project managers show the assignees the importance of the assigned task, and send the message across that they cannot just leave tasks hanging. In addition to that, project managers can also spawn tasks at the right time, instead of just starting activity on them in order to get those items closed ahead of time.

Collaboration between different teams is important for managing projects well. In the context of project management, collaboration is like the next step after communication. It is about getting stakeholders on board with the idea, building consensus, making sure that everyone is working towards the common goal. And this is what makes it difficult, because larger projects include people from different organizations or teams with different goals, thought process, culture and incentives. I think collaboration is the toughest amongst the three [CFC], and is a skill that fewer managers have. Getting different people to agree on things, commit to deliverables and deadlines, and deliver quality results is always a challenge. This is where your people skills come in. The problem in the case of collaboration is that, as compared to communication and follow-through, project managers have less direct control over the situation.

The purpose of this article is not to explain how to get these skills but to identify them. Unfortunately, neither of these skills can be learnt by using tools or by getting certified. The best way to learn these skills is by regularly and consciously practicing them.

Work On Yourself, Not Your CV
The purpose of books, certifications and processes it to capture the experience of practitioners so that others can learn from them. Unfortunately, some of these processes have become rigid over time and project management has become synonymous with experience and knowledge of these tools and frameworks.

These tools and certifications can improve your CV but cannot help you become a better project manager. You have got to have CFC skills to become better managers. It is obviously [as always] easier said than done. Some people are born with these skills, while others have to train themselves. If you really want to be an effective project manager keep practicing your CFC skills. Though these skills are harder to get and take more time to master, it is these that make the difference between a project manager and a great project manager. 

Saturday, July 02, 2011

There Is Lots More To Organizations Than Strategy

12:03 AM Posted by Deepak Nayal , , No comments
Sometimes the extent to which people are so enamored by strategy surprises me a lot. Professionals rush at the first chance of updating their Linkedin profiles with the word “strategy”. Journalists and analysts jump at the opportunity of writing strategy-related articles or analysis. Companies proudly announce major strategies in press conferences. People think of strategy guys as the ones with higher brain functionality, and a good strategy as the solution to most of organizations’ problems. Strategy consultancies are sought by many organizations as their saviors.

I think this fascination with strategy is the biggest misunderstanding in the professional world. Media, bschools and consultants have much to be blamed for this. To be honest I have been part of that crowd as well. That is one the reasons I went to a bschool, and the only reason I joined a “strategy” job after completing MBA. But then, after working there for sometime, a sense of dissatisfaction started to dawn on me. Analyzing markets, making presentations, discussing value chains all seemed fun in the beginning, but then I started to realize that it is all superficial. I started to feel like a bystander, watching a Rio carnival go by, dying to dance with the performers on street but contents himself by just tapping his feet and clapping his hands. Sitting on the sidelines; all words and no action. That’s when I first started to realize that we in the professional world give way too much credit to strategy. Don’t get me wrong. That strategy job of mine was a good learning experience, but then I guess you are either a thinker or a doer. I am more of a doer.

It’s Not Just About Strategy
Any organization has three main aspects: strategy, operations and culture (I combine operations and culture under the umbrella of execution). A successful initiative is the interplay of all three. Note that I mentioned initiative and not organization, because organizations consist of many initiatives, projects, divisions, and the culture may vary between divisions. Organizations have successful as well as unsuccessful initiatives. Now, unfortunately, the world is way more fascinated by strategy, than its other two counterparts. However, the reality is that it is the operations and culture that are the harder elements to deal with, and are actually the ones that really make the difference. These are harder to deal with because when it comes to execution you have to get into details; strategy is more of a high-level stuff. Details matter. Don’t believe anyone who says otherwise.

I have seen countless times, in organizations that I have worked with, that the senior management comes up with some strategy or a vision to increase market share, increase revenue or launch a new product. The strategy guys come up with this good-looking presentation. But then when it comes to executing that strategy, the outcome is not really what was expected. Now, obviously, that’s not always the case, but the chances of things not working out the way they were meant to are pretty high. There are many cases where even though the strategy is good and is important for an organization’s growth, it cannot be just outright executed because of either the way managers are incentivized or due to complexity of systems or because of the company culture.

In case, you are thinking, “well, I have never seen that”, then either you haven’t been involved or informed of both aspects of your organization/division (a rarity, I believe, as generally employees are aware of the strategic initiatives and involved in operational aspects of their companies) or the reality is not that apparent to you or you never looked deep enough (no need to go too deep though) or you are just plain stupid or your company is really awesome (and seriously, you should tell the world if its the last one!).

Examples From The Corporate World
Examples of world’s fascination with the strategic stuff, as compared to execution-related aspects, and its [bad] consequences, are abundant in corporate world. Mergers and acquisitions in particular are full of such cases. Many research studies have found out that most of the M&As fail due to post-merger integration issues. Examples, anyone? AOL-Time Warner. News Corporation-Myspace. Lloyds TSB-HBOS. The list just keeps going on. But thanks to media it’s the initial hype and the act of buying a company that gets most attention.

There are plenty more examples where execution excellence trumps strategy. Look at the tablet market. Tablets have been around way before Apple jumped into the market. And now there seems to have been an explosion of players in the tablet market. All of them have their own strategies. But none of them have been able to execute that strategy as well as Apple. Its execution excellence, the attention to details, has led Apple to market leading position in the tablet market. Anyone who uses Apple products will understand what I am talking about. This top-notch execution of strategy is not just apparent in its products but in its stores as well. Go to a Best Buy or PC World, look at the store and how Android tablets are placed there, and then go to an Apple store and look at how the iPads are placed there.

Look at Nokia in the smartphone market. It went from a world leader in mobile phone to an also-ran in smartphone market. Though they had a strategy to fight back Apple and Google, they just could not turn around their products that fast, and eventually had to settle for a side-partnership with Microsoft. They had their strategy but the execution team was not able to deliver it. This line from Nokia’s CEO Stephen Elop’s famous ‘Burning Platform’ memo sums it up really well -
At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.
The Right Mix
The world’s earliest fascination with strategy probably was SunTzu’s The Art of War. Since then strategy has been associated with various words, such as army, battles, leadership, competition, etc. Strategy has evolved to become this thing on a high pedestal that tells “foot soldiers” aka employees where to march and whom to fight. Unfortunately, many see strategy as a higher-level function as compared to execution. Truth however is that best leaders and managers see strategy and execution as interconnected aspects, one affecting the other and also feeding from it. Best organizations are not just top-down, but also bottom-up and side ways.

Thomas Elva Edison once famously said that genius is one percent inspiration and ninety-nine percent perspiration. I think a corollary of that statement is that an organization’s success is one percent strategy and ninety-nine percent execution. I am not against strategy, it obviously is important. But I am surely against world’s fascination with strategy, as clearly it is the execution that differentiates the leader from the follower. But then it is not really about picking either strategy or operations or culture as the winning element, but about understanding that all of these components are important and that an organization’s success depends on using the right mix of these three.