Business Decision Frameworks

Finally, I got around to what I wanted to do since my MBA days - start putting my business framework flowcharts in a single PDF, book like format. I cleaned up about half of them.

Here it is -Business Decision Frameworks (Version 1)

People (I include myself in that) have found them useful for varying purposes such as preparing for interviews to evaluating and analyzing business problems.

Drop me a line, if you want to give feedback. If you like it a lot or hate it a lot, please subscribe yourself at businessframeworks@googlegroups.com. That kind of feedback helps me !. Also pass it on to your freinds whom you think might love it or hate it as you do. Also, let me know if you want to contribute.

Enjoy reading and have a nice weekend folks !

New products need R&D teams in super hitech areas (hehe)

My experience today reminded me again why new products are often created by frustrated users and how there are inadequate products even in dumb daily activities.

I just wanted an alarm clock to wake up at 6AM on Mon/Wed/Fri. I just want to set that up once and forget about it for the next quarter (no I forgot to turn it up/down business).

After searching for 3 hours in retail stores and online, I had to find an obscure xmms based alarm, add some morning songs to it, connect my PC to my music system through wireless devices, and hold onto the remote of the music system to stop the alarm. xmms-alarm has cool features such as fade out the sound after a few minutes and stuff but wanted a button at hand to stop the alarm.

How cool it would be to have a standard alarm form factor device doing all the above ?

Chasing Life - Book Review

This book is about things that you can do starting now (or things you should stop doing now) to live a healthier, happier, longer and funcational life. I would recommend this book to anybody who is not into regular exersices and not conciously eating healthier food.

The strenghts of the book:

- Sanjay Gupta explains medical lingua in a way that common people can understand.

- He has a bullteized to-do items at the end of each chapter, which make you come back to what he is trying to tell you after all the medical slang.

- He touches each and every aspect of leading a healthy life from basics, such as vitamins and antioxidants to stress to HGH, stem cells to exersices. He not only explains the medical reasons why or why not each of those topics contribute to healthy functional life, but he also boils them down to the ten things you can/should do.

Here are a few things that I learnt myself to do (including the medical reasons behind them) and have already started working for me

Diet

1. Push away the food when you are 80% full
2. Eat a breakfast, it helps you eat less calories through out the day
3. Add a fish, a glass of wine a bar of brown choclate a week

Exersice

1. Add upper body weight resistance to cardiovascular
2. Be more active, have more movement during the day
3. Surprise your body with newer activities

Stress

1. Learn how to reduce or manage/enjoy stress
2. How optimistic attitude can help you live happy, longer life

Mr. Market - Sanest investment advice, made simple

You should imagine the market quotations coming from a remarkably accomodating fellow named Mr. Market, who is your partner in a private business. Without fail, he appears daily and names a price at which he will either buy your interest or sell your interest.

Even though the business that you two own may have economic characterestics that are stable, Mr. market's quotations are not. The poor fellow has incurable emotional problems. At times he feels euphoric and can see only favorable conditions affecting the business. WHen in that mood he names a very high buy price because he fears you will rob him of his interest. At other times, he feels nothing but trouble ahead and sees the end of the world. On those accations, he names a very low sell price since he is afraid you will unload your interest on him.

Mr. Market has another characterestic. He does not ming being ignored. He will come back again and again if you are not interested in his quote today.

Here is the advice.

In those conditions, the more depressed and maniacal Mr. market is, the beter for you. Mr. Market is there TO SERVE YOU AND NOT TO GUIDE YOU. Its is good to take advantage of him when he is in a foolish mood, but it will be DISASTROUS IF YOU FALL UNDER HIS INFLUENCE.

As they say in poker - "if you've been in the game for 30 mins and you dont know who the patsy is, YOU ARE the patsy.

Thanks to Ben Graham for this.

Progress paradox

I was looking more seriously at a chart pasted in our breakroom called "is it depression ?". It has a series of tests such as "cant sleep" "feeling sad" "feel like hittin somebody" "gettin angry at your manager" to see whether you have depression and recommends to see a doctor.

I am like what? Arent we the among the best paid employees in the US market ? Arent we able to feed our families ? Why should then we get depressed ? It reminded me of a book called "progress paradox".

Its all related to being psychologically happy ?

That book has some interesting stats like

* the disabled and chronically ill people are more happy than healthy people because of the appreciation they have developed for life
* the old people are generally more happy than young people because of the appreciation they have for forgiveness and non-material things
* lack of money makes you unhappy for sure, but having money does not make you happy
* depression is a 50 billion market and there are less people who get treated for depression as you pass down the class chain

For people who are suffering with depression, I have one pill - have gratitude. Count your blessings than inventorying your complaints. Trust me, even if you get all those complaints sorted out and solved, you would still get unhappy. Have a "just let it go" attitude. Beleive me, there is research area called forgiveness, which says people who forgive more tend to have a more cardiovascular diseases and lower immune system functions.

Book review - Blue ocean strategy

This is the book from 2005, I am cathing up :).

This book definetely goes into my strategy favorites. Blue ocean strategy is all about how to create products which make the competition irrelevant. There are many examples - starbucks made their fellow coffee retailers irrelevant when they launched (their competition is not relevant to coffee at all). SouthWest made competition irrelevant since it did not compete with airlines when it was launched.


I liked the book because of two reasons -

The first is its analytical tool kit. In every chapter the authors present an analytical tool to practically follow their advise. Their strategy map is much better than the position map, it just not show where you are with respect to competition, but it also shows what are the factors relevant in the industry and how you are doing with respect to your competitors along those factors. The beauty of the map is that you can just say whether your strategy is good or not by looking at the map. The authors present a tool for pricing models as well.

The second is the completeness. It starts right from the question of why/how to create a blue ocean strategy and ends with execution and sustaining the strategy. It talks about almost all facets of management, lauching, pricing, leadership etc.

A must read for all managers, hey who does not have competition and who does not want to get away from them ?. A must high tech entrepreneurs since they never set their foot into red oceans.

Chasing Life

You know the community which lives longer and functional than most other people in rich countries ? Ranching people in Costarica !. Their 80 year old can work like an American 40 year old.

CNN's Sanjay Gupta has been an OK guy for me to watch, but his new book, chasing life seems to be very interesting and right on the line. I am going to read this book over the weekend but the things that he found out that we can do daily which will contribute to over all body function and longevity are things that we do not do normally - managing stress, eat healthy, working with a purpose (straight from Guy Kawasaki's Art of the Start !), maining good active relationships with family, maintaining an active life style etc.

Look out for the book review over the next week !

You want to invest in a person ? Ask his freinds and relatives !

The chinese government officials have a cool way of deciding on promotions. They will interview your freinds, collegues, parents and see whether you have been a good man or not. Your drinking and gambling habbits will receive a very bright red flag.

Actually, thats the exact process in which arranged marriage evaluation process works in India. Those exact same things receive serious red flags. Interestingly, that is close to what VCs do when they are investing in a project - they would interview all sorts of people who can tell what sort of a person you are. Businesses use a flawed version of this - its called the 360 degree evaluation !

In my investing demystified article, I make a comment about how the person you want to invest in should be a person to which you should be willing to marry your daughter to. I think thats the way you should select life partners, business and work partners !

Want innovation ? Do not hire the 10% people !!

If you want innovation, do not hire the top 10% of a class.


Innovation requires you to be radical, not follow the rules, not afraid of failure, not afraid of taking risks. IMHO, The top 10% of a school are not innovators, they are followers. They got excellent grades because they chose to follow the rules of the game. The bottom 10%, though they are in par with the rest of the class when they entered it (meaning they can perform if they want to or passionate about it), but chose to not follow the rules (or cannot follow the rules).

Complacency, attitude and reasonable people

I am watching Bangladesh and SA cricket match - Mortaza was so mad at himself for so long for failing to stop a ball surely going towards the boundary when SA was down 6 wickets for a score below 100. I thought hey its reasonable that he did not stop the ball, it was so hard, almost impossible to stop it. Freakishly, it reminded me of a question that my smart, hardworking 8th grade cousin asked when I went to India last time - why not take engineering track, there are so many engineering colleges and there are so many jobs for engineering graduates that I will get a very decent job.

If theres one thing that kills businesses and people its complacency, attitude and all those reasonable people. The business is going alright, why worry ? I will get an alright job, why worry ? Everything works this way, why should I worry ?

Its not that if you have a chalta attitude, you wont a decent tomorrow, you wont have customers for your business tomorrow or you wont survive if you are a reasonable person or you team will lose if you fail to stop one four. But you or your business would be killed over time because the world around you is constantly improving. I have had many businesses cases where complacency killed a product (BMCs flagship product ..) and excessive paranoia kept a company alive (Samsung CEO attitude).

So my answer to my cousin was its not like you wont get a job. Because of your attitude, you would be always complacent and because of that you would be always sliding downwards, if you are lucky in your life. I think that is what Chappel was trying to say to Tendulkar. I am not saying you are not great, I am saying you are not constantly improving. And progress wont happen with reasonable people - A Reasonable Person Adapts Themselves to Their Environment. An Unreasonable Person Endeavors to Adapt the Environment to Their Vision Therefore, All Progress Depends on Unreasonable People (and thanks to JD and JBS for introducing me to this quote).

Guess who won the match today and who got killed :)

One more reason not to take VC money (if possible I mean)

Today, WSJ ran a very good article on dilemma that tech startups face when they dream big (aka Google) but end up OK (with stable cash flows).

The case here is a company called Odeo, which does podcasting service. The start up ended up OK, making breakeven cash flows with ad money (and thanks to decreasing costs of running a web service compan) but because the founder took VC money, he is forced to search for strategies which would make a home run. The founder previously sold Blogger to Google so, he has enough money to pay off the VCs and keep the company as it was. But if you are not that guy, you would be forced to either hit big or die, not run with decent cash flows.

Mini Book Review: How Countries Compete

"How Countries Compete" (ISBN-13: 978-1422110355, Author: Richard Vietor) in a nut shell is about how globalization has mde countries compete with each other for a given amout of money ("compete for market share of investments") and what should governments of countries do to make themselves competetive.

A manager's view of Globalization has both internal and external perspective. Internal perspective deals with the analysing the reasons to globalize and putting the internal structures in place to globalize. For internal perspective, I like Pankaj Ghemawat's articles, including the latest (HBR March 2007) article, "Managing Differences: The Central Challenge of Global Strategy". Books such as world is flat and mirage of global markets are mostly about those internal perspectives. The how countries compete book gives the external perspective of tools that a managers can use to analyze which countries are the best to invest. Make no mistake (i hate that phrase, but have no time to think about a better one), this book talks about what a government can do to make itself more competitive but the same logic and tools can be used by managers to analyze what countries to invest in. This book basically expands the "Role of Government" section in Porter's Competetive Advantage of Nations article.

The book starts with the strategy a country should choose to compete. That strategy depends on the context, its resources, its policital structure, the clusters etc. etc. Then it talks about the tools that the government has at hand (fiscal, monetary, trade, wage, infrastructure, legal, regulatory etc etc) to use to execute on its strategy.

The book then talks about half a dozen countries (Japan, Sigapore, China, India, Mexico, South Africa, Saudi Arabia, Russia, Italy), their history of competitiveness and how they got to the present stage (good and bad) with (or without) using the tools mentioned above.

The most important tool that I got out of this book is something called "trajectory". Based on how the government is using the above mentioned tools now, the author says, the managers can predict the trajectory of how the country is going to shape atleast in the near future (ofcourse there are always wars and such which can displace the trajectory) and the managers should make investment decisions accordingly.