Even after the Federal Reserve poured billions into Banks under the TARP scheme, banks did not resume lending. To those of us who study management, this was not a surprise at all – why would any bank in its senses lend to anyone in such an era of uncertainty? To economists, however, it was astonishing: there is supposed to be a Multiplier..banks are supposed to lend some multiple of their reserves, which in turn.. and so on..but they didn’t! The multiplier was actually below 1.0 (as the Australian economist Keen correctly notes in his excellent book ‘Debunking Economics’).
I remember posting comments on various blogs around the world at the time, essentially saying that if the Fed wants lending to increase, they would have to do it themselves – banks were not going to. I didn’t expect, of course, that top managers of banks would be so downright shameless as to pay it out to themselves as bonuses, but that is another story.
More than anything else, it seems to me to highlight the difference between Economics as a discipline and the field of Management. Economists try to understand, and model, very large systems – like the economy itself. To keep their models manageable, they have to simplify them, to the point where, sometimes, what really matters in a given situation is assumed away. Like banks. How do banks behave? To an economist, banks are simply a black box, a conduit for the transmission of the money supply.
To someone concerned with the field of management, the really interesting question is: how are banks managed? How do they respond to external challenges? What drives them? The mechanism of the black box, in other words. I had created just such a course at IIM Ahmedabad during the ten years I taught there .. unfortunately, nobody seems to have kept it alive after I left, and we are back to ‘Bank as a black box’ level of understanding.
At times like these, it turns out, understanding the internal mechanics is crucial. No wonder TARP failed – almost a trillion dollars wasted, all for lack of understanding of how the black box works.
Friday, December 30, 2011
Friday, December 9, 2011
Account Management: the new role in Indian IT companies
In the good old days of software services outsourcing, there was really no need for anything like account management – what you were selling was cost savings, whether real or not, and the customer (mainly a large US company) was buying it.. it was a supply-constrained world where anyone who could offer good quality, and reliable service, could succeed. It was essentially an ‘all you can eat’ buffet….
Well, the inevitable graying and maturing of the market has now happened. Clients are no longer naïve about what to expect, the offshore delivery model is well-established and pretty standard across Indian companies, at least the reputable twenty or so of them. Now the client has become unreasonable! He keeps asking ’what value have you added to me?’ while remaining clueless, or at least, silent, about that the aforesaid ‘value’ is. Selling to new prospects is getting competitive, and existing clients are asking uncomfortable questions.
Enter the ‘account manager’.
Initially, most Indian companies got sales people in the field to play this role – after all, they already have relationships with the client, they are already in the US, or whatever, and so on. Unfortunately, it soon became clear that, once the business relationship is well under way, the customer doesn’t enjoy meeting salespeople any more – strangely enough, he thinks they are trying to sell him something!
The next iteration that was tried was a ‘two in a box’ model, where a salesperson in the field and a delivery person back in India played a jugalbandhi. If the two were very tuned to each other, and respected each other a lot, this arrangement worked well enough – but mutual liking is hardly a process solution. And now there was a new problem – when the delivery person tried to talk about new opportunities, the client took the opportunity to beat him on the head over some delivery issues, and the conversation usually took a different turn.
But the business challenge did not go away – how to grow existing accounts. New sales had slowed for most medium-sized companies, and it was becoming clear to top management in these companies that most of the growth would have to come from selling more services to the same set of customers they already had.
A new breed
Clearly, we need a new solution – a new breed of account managers who are neither salespeople nor delivery managers, either something in between or something else altogether.
My own theory is that account management as a discipline, or challenge, or role, is more akin to marketing than anything else – the account manager should understand the customer so well that she can create solutions the salesperson can go and effortlessly sell. This is what marketing is supposed to do for sales, at the level of the overall company, isn’t it? If the account manager is responsible for delivery, she will get sucked into conversations about delivery – if she is responsible for sales, the client will run a mile when he sees her. So the account manager should be responsible for neither – only for the growth of the account, and the overall relationship.
Position, KRAs and Training
Should delivery report to the account manager? Should sales? With most Indian companies, since sales is in the field, and delivery managers are back home with the account manager, the first is an option, the second is not. On the other hand, the account manager does need to influence both sales and delivery – if he cannot influence sales, the account will not grow – if he cannot influence delivery, the client will ignore him. On the whole, it may be best to have delivery report to the account manager provided the delivery manager is strong enough to manage day to day issues on his own. Sales is usually a different organization, so influence will have to be indirect, and worked through joint KRAs (and joint reviews by senior management are often more useful than joint KRAs.. you do what your boss reviews you against, whether KRA or not, I have found in practice.)
KRAs of the account manager should be: growth of the account, relationship health, our positioning in the customer’s eyes, and depth of relationship (how many different organizational units the account has penetrated, how many different projects, etc.). Accounts should have 1 year plans, 3 year mission statements, and should be reviewed quarterly against the account plan.
Selection and development
The ideal profile is an experienced delivery manager who wants to become a business manager, for there is no better preparation for a potential BU head than being an account management first, preferably of a large and visible account.
Indeed, account management should be a compulsory step on the path to heading a business division.
As usual, mentoring and coaching is the best way to grow account managers – but the first step should be to make sure the person really wants to do the role – being delivery manager, having clear KRAs, going deep into technical issues, managing hordes of people – if these are the things that thrill a person, he may not even want to be an account manager. The necessary qualities are: a passion for growth, excitement with solving problems for the customer, and a head for business..
Having selected the right set of people, it would be useful to create a community or cadre of account managers, who meet informally to exchange notes. One good way to get them to network among themselves is to put them through a common training program.
The ‘Building Account Managers’ program I have run for several clients, is usually spread out over 6 months, while they transition from a delivery role. It takes time for people to adjust to a new mindset, a new set of expectations, so it is not useful to put them through a crash course over a weekend and expect them to learn this slippery new role. Topics include: how to understand the customer’s business, customer’s organization, politics in organizations, selling skills, negotiation skills, service quality concepts, and, of course, how to create and monitor account plans. An important module is teaching them tools by which they can estimate value delivered by their services, to the customer – in the customer’s language.
So, a toast to the brave new world of account management…! May their tribe grow, and their accounts too!
Well, the inevitable graying and maturing of the market has now happened. Clients are no longer naïve about what to expect, the offshore delivery model is well-established and pretty standard across Indian companies, at least the reputable twenty or so of them. Now the client has become unreasonable! He keeps asking ’what value have you added to me?’ while remaining clueless, or at least, silent, about that the aforesaid ‘value’ is. Selling to new prospects is getting competitive, and existing clients are asking uncomfortable questions.
Enter the ‘account manager’.
Initially, most Indian companies got sales people in the field to play this role – after all, they already have relationships with the client, they are already in the US, or whatever, and so on. Unfortunately, it soon became clear that, once the business relationship is well under way, the customer doesn’t enjoy meeting salespeople any more – strangely enough, he thinks they are trying to sell him something!
The next iteration that was tried was a ‘two in a box’ model, where a salesperson in the field and a delivery person back in India played a jugalbandhi. If the two were very tuned to each other, and respected each other a lot, this arrangement worked well enough – but mutual liking is hardly a process solution. And now there was a new problem – when the delivery person tried to talk about new opportunities, the client took the opportunity to beat him on the head over some delivery issues, and the conversation usually took a different turn.
But the business challenge did not go away – how to grow existing accounts. New sales had slowed for most medium-sized companies, and it was becoming clear to top management in these companies that most of the growth would have to come from selling more services to the same set of customers they already had.
A new breed
Clearly, we need a new solution – a new breed of account managers who are neither salespeople nor delivery managers, either something in between or something else altogether.
My own theory is that account management as a discipline, or challenge, or role, is more akin to marketing than anything else – the account manager should understand the customer so well that she can create solutions the salesperson can go and effortlessly sell. This is what marketing is supposed to do for sales, at the level of the overall company, isn’t it? If the account manager is responsible for delivery, she will get sucked into conversations about delivery – if she is responsible for sales, the client will run a mile when he sees her. So the account manager should be responsible for neither – only for the growth of the account, and the overall relationship.
Position, KRAs and Training
Should delivery report to the account manager? Should sales? With most Indian companies, since sales is in the field, and delivery managers are back home with the account manager, the first is an option, the second is not. On the other hand, the account manager does need to influence both sales and delivery – if he cannot influence sales, the account will not grow – if he cannot influence delivery, the client will ignore him. On the whole, it may be best to have delivery report to the account manager provided the delivery manager is strong enough to manage day to day issues on his own. Sales is usually a different organization, so influence will have to be indirect, and worked through joint KRAs (and joint reviews by senior management are often more useful than joint KRAs.. you do what your boss reviews you against, whether KRA or not, I have found in practice.)
KRAs of the account manager should be: growth of the account, relationship health, our positioning in the customer’s eyes, and depth of relationship (how many different organizational units the account has penetrated, how many different projects, etc.). Accounts should have 1 year plans, 3 year mission statements, and should be reviewed quarterly against the account plan.
Selection and development
The ideal profile is an experienced delivery manager who wants to become a business manager, for there is no better preparation for a potential BU head than being an account management first, preferably of a large and visible account.
Indeed, account management should be a compulsory step on the path to heading a business division.
As usual, mentoring and coaching is the best way to grow account managers – but the first step should be to make sure the person really wants to do the role – being delivery manager, having clear KRAs, going deep into technical issues, managing hordes of people – if these are the things that thrill a person, he may not even want to be an account manager. The necessary qualities are: a passion for growth, excitement with solving problems for the customer, and a head for business..
Having selected the right set of people, it would be useful to create a community or cadre of account managers, who meet informally to exchange notes. One good way to get them to network among themselves is to put them through a common training program.
The ‘Building Account Managers’ program I have run for several clients, is usually spread out over 6 months, while they transition from a delivery role. It takes time for people to adjust to a new mindset, a new set of expectations, so it is not useful to put them through a crash course over a weekend and expect them to learn this slippery new role. Topics include: how to understand the customer’s business, customer’s organization, politics in organizations, selling skills, negotiation skills, service quality concepts, and, of course, how to create and monitor account plans. An important module is teaching them tools by which they can estimate value delivered by their services, to the customer – in the customer’s language.
So, a toast to the brave new world of account management…! May their tribe grow, and their accounts too!
Thursday, November 3, 2011
On Business Plans and their Reviews
The business plan review is as sacred a ritual as the business plan ‘sign-off’ itself. Yet few people would agree that it does anything more than spill blood, damage careers, and inflict pain. Is there a batter way to do it?
Most reviews tend to be about numbers – why haven’t you made your number? Apart from the pleasure it may give the reviewer in inflicting pain and humiliation, such reviews don’t do much good, and plenty of harm
What is the real value of the business plans?
In most cases, though (and I have written about this at length elsewhere, so will not elaborate here), the real point of planning is the planning itself, not the plan. It is the process that has value, not the outcome… ‘Plans are nothing, Planning is everything’ and so on..,
What are the key elements of the process?
1. Getting all the relevant people involved, so they know what to expect from each other
2. Identifying the assumptions underlying the plan and surfacing all the hidden assumptions we would all rather not talk about
3. Identify the one or two key actions (or strategic initiatives or whatever we want to call them) we need to take to make sure we can actually execute the plan.
If we understand this, it becomes obvious what we should review every quarter (monthly isn’t worth it, in most businesses)
1. The assumptions we had made: do they still hold good? Is the world unfolding the way we expected? If not (usually not!), what has changed?
2. Therefore, what do we need to change in the plan?
3. Who is the weak link in the execution? Therefore who needs to be strengthened and supported?
4. Which of the strategic initiatives is moving ahead as we wanted? Which isn’t, therefore what do we need to do about it?
5. What new initiatives do we need (ideally, we should not try to run more than three initiatives in a company at a time – if we are going to add one, we should drop one)
For instance, with one of my clients – a software products company selling to financial institutions, the key assumption turned out to be that financial institutions in India will replace an old product in droves – this is the assumption to monitor – more important, to see what we can do about it – can we make them migrate? Can we somehow make them feel comfortable? Is there a leader whom everyone will emulate? And so on. With another of my clients, in the outsourced product development space, the key assumptions turn out to be that we will be able to go to large enterprises by partnering with leaders in certain chosen focus technologies. Top management can then focus on questions like – how are we progressing in this partnering effort? Do we know who the leaders are? What can we do to make them partner with us? If progress is not what we expected, what is our plan B to achieve next quarter’s numbers? And so on.
If reviews focused on assumptions and the progress of strategic initiatives, they would actually be useful.. Now wouldn’t that be something! A business plan review that actually takes us somewhere..
Most reviews tend to be about numbers – why haven’t you made your number? Apart from the pleasure it may give the reviewer in inflicting pain and humiliation, such reviews don’t do much good, and plenty of harm
What is the real value of the business plans?
In most cases, though (and I have written about this at length elsewhere, so will not elaborate here), the real point of planning is the planning itself, not the plan. It is the process that has value, not the outcome… ‘Plans are nothing, Planning is everything’ and so on..,
What are the key elements of the process?
1. Getting all the relevant people involved, so they know what to expect from each other
2. Identifying the assumptions underlying the plan and surfacing all the hidden assumptions we would all rather not talk about
3. Identify the one or two key actions (or strategic initiatives or whatever we want to call them) we need to take to make sure we can actually execute the plan.
If we understand this, it becomes obvious what we should review every quarter (monthly isn’t worth it, in most businesses)
1. The assumptions we had made: do they still hold good? Is the world unfolding the way we expected? If not (usually not!), what has changed?
2. Therefore, what do we need to change in the plan?
3. Who is the weak link in the execution? Therefore who needs to be strengthened and supported?
4. Which of the strategic initiatives is moving ahead as we wanted? Which isn’t, therefore what do we need to do about it?
5. What new initiatives do we need (ideally, we should not try to run more than three initiatives in a company at a time – if we are going to add one, we should drop one)
For instance, with one of my clients – a software products company selling to financial institutions, the key assumption turned out to be that financial institutions in India will replace an old product in droves – this is the assumption to monitor – more important, to see what we can do about it – can we make them migrate? Can we somehow make them feel comfortable? Is there a leader whom everyone will emulate? And so on. With another of my clients, in the outsourced product development space, the key assumptions turn out to be that we will be able to go to large enterprises by partnering with leaders in certain chosen focus technologies. Top management can then focus on questions like – how are we progressing in this partnering effort? Do we know who the leaders are? What can we do to make them partner with us? If progress is not what we expected, what is our plan B to achieve next quarter’s numbers? And so on.
If reviews focused on assumptions and the progress of strategic initiatives, they would actually be useful.. Now wouldn’t that be something! A business plan review that actually takes us somewhere..
Sunday, September 25, 2011
The 2G Scam: which was the real scam?!
so the government wanted to auction the spectrum and rake in tons of money.. Raja let the mobile companies buy it cheap..BUT
- what right did the government have to auction the spectrum anyway? Surely it is a public good - like air.. tomorrow, if the government wants to auction off rights to air, will we stand for it?
- the government has every right, indeed duty, to regulate the spectrum, but to sell it? Don't we pay taxes already, for them to do the job of regulation?
- if Raja had in fact sold the spectrum for much more, guess who would have paid for it, in the end? You and me, of course - the carriers would have just passed on the costs to us in the form of higher rates.. it would have been just one more tax on mobile use - why should there be any?
- perhaps Raja saved us all from this completely illegitimate tax!
- which was the scam in the first place? trying to sell us something they had no right to sell?
- what right did the government have to auction the spectrum anyway? Surely it is a public good - like air.. tomorrow, if the government wants to auction off rights to air, will we stand for it?
- the government has every right, indeed duty, to regulate the spectrum, but to sell it? Don't we pay taxes already, for them to do the job of regulation?
- if Raja had in fact sold the spectrum for much more, guess who would have paid for it, in the end? You and me, of course - the carriers would have just passed on the costs to us in the form of higher rates.. it would have been just one more tax on mobile use - why should there be any?
- perhaps Raja saved us all from this completely illegitimate tax!
- which was the scam in the first place? trying to sell us something they had no right to sell?
Thursday, September 8, 2011
Rain, the US Open and Project Management
Now that rain has washed out wo days of tennis at the US Open, the USTA is left with no good options - there are still 4 rounds to play, and only 4 days to play them in.
which brings me to mind of a simple rule of project management: when you put up your project plan, assue that things will happen which you cannot predict or control.. set aside buffers for them AT THE END of the project timeline..
what the USTA should have done is, in the original scheduling, kept Thursday and Friday free of the main events like the Men's and Women's singles, filled them up with doubles, veterans', juniors and whatnot - then they would still have some options..
all life is a project...!
which brings me to mind of a simple rule of project management: when you put up your project plan, assue that things will happen which you cannot predict or control.. set aside buffers for them AT THE END of the project timeline..
what the USTA should have done is, in the original scheduling, kept Thursday and Friday free of the main events like the Men's and Women's singles, filled them up with doubles, veterans', juniors and whatnot - then they would still have some options..
all life is a project...!
Friday, August 19, 2011
Reflections on Corruption and Lokpal bills
Attempts to solve the problem through bills like the Lokpal bill, of whichever hue, ignore the fundamental questions of why corruption exists in the first place in a country like India. Any solution that does not get to the root will deliver only cosmetics..
• A feudal tradition, hijacked and co-opted by politicians, and renamed Democracy (see Pavan Varma’s Being Indian, for a nice exposition)
• A populace who accepts, and is willing to work with, the system because the system also protects its privileges
• Enormous power in the hands of people who are paid very little
• A highly decentralized system where the buck stops at every desk
All these almost guarantee corruption.
The feudal tradition, the most deep-seated of these factors, goes back centuries if not millennia. It may take at least a generation to shake off.
One way to reduce the pain is to ensure that Government approval is required for as few things as possible (which, in turn, will lead to the kinds of eco-disasters we are seeing all over India). Another way is to drastically increase the salaries of bureaucrats – can we afford it? and will it solve the problem, if the mind-set is not changed? Maybe it will result only in further looting of the (re)public….
At the height of the Emergency, corruption was probably lower than it is in today’s freer times- but at what cost? As Easterly points out in ‘The White Man’s Burden’, a centralized dictatorship exercises greater restraint in matters of corruption because it does not want to kill off the goose that lays the golden eggs.. surely, nobody wants a return to those bad old days..
The fact is, all economies, including the US and Russia, have gone through this wrenching period of high corruption and looting at inflexion points when the economy was suddenly freed up and incomes rose. Why should India be any different?
Surely the Lokpal bill is no answer, and Anna Hazare’s movement is not going to address any of these issues – but, on the other hand… I wonder.. we have to start somewhere.. maybe this is the start..?
• A feudal tradition, hijacked and co-opted by politicians, and renamed Democracy (see Pavan Varma’s Being Indian, for a nice exposition)
• A populace who accepts, and is willing to work with, the system because the system also protects its privileges
• Enormous power in the hands of people who are paid very little
• A highly decentralized system where the buck stops at every desk
All these almost guarantee corruption.
The feudal tradition, the most deep-seated of these factors, goes back centuries if not millennia. It may take at least a generation to shake off.
One way to reduce the pain is to ensure that Government approval is required for as few things as possible (which, in turn, will lead to the kinds of eco-disasters we are seeing all over India). Another way is to drastically increase the salaries of bureaucrats – can we afford it? and will it solve the problem, if the mind-set is not changed? Maybe it will result only in further looting of the (re)public….
At the height of the Emergency, corruption was probably lower than it is in today’s freer times- but at what cost? As Easterly points out in ‘The White Man’s Burden’, a centralized dictatorship exercises greater restraint in matters of corruption because it does not want to kill off the goose that lays the golden eggs.. surely, nobody wants a return to those bad old days..
The fact is, all economies, including the US and Russia, have gone through this wrenching period of high corruption and looting at inflexion points when the economy was suddenly freed up and incomes rose. Why should India be any different?
Surely the Lokpal bill is no answer, and Anna Hazare’s movement is not going to address any of these issues – but, on the other hand… I wonder.. we have to start somewhere.. maybe this is the start..?
Friday, January 21, 2011
Reflections on vegetarianism, ends and means, the path and the traveller
It all begins with a debate on Guardian CIF about the merits or otherwise of Vegetarianism (what an ugly word that is!).. the debate was entirely about the rights of animals, ecological efficiency, and whatnot.
Which is all beside the point..
The only good reason not to kill animals for food is that one should not kill, period. Not out of concern for the poor animal but out of concern for ourselves. If I am violent, it changes me. It makes me less of a human being inside – something inside me becomes hard and insensitive. As the Buddha pointed out long long ago, the evil-doer is punished, not in the next life, but here and now. It is out of compassion for ourselves, not for the animals, that we should avoid killing them.
‘ends justify the means’ – what does it mean? Either it is a category mistake – ends and means are different in kind and cannot be compared, or we are merely saying means are also ends, and some ends are more important than others, which is trivially true, or we are saying something absolutely false. I think it is the third.. the means we adopt to achieve the ends, define and change us – if the means we use are evil, we become unworthy of the ends even if the ends are achieved. The Buddha, of course, taught us all this some 2,500 years ago.
The path affects the traveler on it….
Which is all beside the point..
The only good reason not to kill animals for food is that one should not kill, period. Not out of concern for the poor animal but out of concern for ourselves. If I am violent, it changes me. It makes me less of a human being inside – something inside me becomes hard and insensitive. As the Buddha pointed out long long ago, the evil-doer is punished, not in the next life, but here and now. It is out of compassion for ourselves, not for the animals, that we should avoid killing them.
‘ends justify the means’ – what does it mean? Either it is a category mistake – ends and means are different in kind and cannot be compared, or we are merely saying means are also ends, and some ends are more important than others, which is trivially true, or we are saying something absolutely false. I think it is the third.. the means we adopt to achieve the ends, define and change us – if the means we use are evil, we become unworthy of the ends even if the ends are achieved. The Buddha, of course, taught us all this some 2,500 years ago.
The path affects the traveler on it….
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