Business to the Buddha

Tag: six sigma

  • Pandemic – why companies should choose to spend

    Coronavirus pandemic is a global phenomenon, as of now 160 countries out of 193 recognized countries are affected. Many countries are in lockdown. All the developed countries are affected, therefore, the economy worldwide is severely affected. In this trying time, the whole world needs Keynesian economics. In nutshell, the concept says – “Increase government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.” Here I am going to discuss my opinion on why companies should choose to spend and continue working on their ongoing plus upcoming projects.

    http://business2buddha.com/2013/11/24/keynes/

    Keynesian economics considers or provides guidelines to the Governments. You can check India approves 1.70 lakh Crore package for poor, $2 trillion package US Congress has approved recently. Apparently, this is the biggest package US or for that matter, any government has approved. Government spending is only one part. I am of the opinion that every industry must seriously consider not only spending but also sustaining employees. Short term “shareholder value” can wait for better long terms sustenance. I know this sounds counter-intuitive – special when all companies are losing revenues due to lockdown, expecting retaining employees and to sustain a business. Surely this will impact the survival of many firms, projections and revenue targets of almost every company and shareholder returns. Let me give you some basic reasoning for my opinion of private firms too should continue their investment and how can it help bring the economy on wheels again.

    coronavirus-hospitality-industry-impacted

    Due to Coronavirus few industries are directly affected, namely; Airline, Hospitality and discretionary expense items e.g. beauty or apparel. People are going to spend on their basic necessities for the next few weeks or who knows months. The impacts revenue and therefore growth-related projects of these industries. Let us take an example as an explanation.

    Example

    An apparel company wanted to increase its footprints in a new region. That would require – finding retail space, employees for the store, furniture/store interiors design, products to put in the shelf and technology e.g. internet, hardware, POS and marketing to bring shoppers in-store. Due to the impact of a pandemic the apparel company will delay all these. The domino effect will be on – real estate, prospective employees, interior designers, producers (who produce for the apparel company in terms of aggregate demand), internet service provider, IT company planning to provide hardware and software and the marketing activation agency that was supposed to engage in the project – right from printing flyers. Why I brought flyers? Because this and interior decorators have many unskilled laborer working for them. The result – the domino engulfs many part-time workers. When these part-time workers do not have money they will have an impact on purchasing many other things. A self-fulfilling prophecy – read more about self-fulfilling prophecy here.

    At this time, what should private businesses do? At whatever negotiated discounts – they must continue their projects be it starting footprints in new regions as given in the above example. The companies must continue their spending because sooner or later things will fall in place. People will start consuming and the economy will be on track again. If spending is done as usual – the economy will come on its feet faster than it other would. Therefore I am suggesting that after the lockdown due to pandemic – why companies should choose to spend.

    Summary

    I fell in love with research of McKinsey and company, “Grow Fast or Die Slow” sustaining growth in technology companies. Paraphrase of this research is –

    1. Growth matters more than margin or cost structure
    2. No correlation between cost structure and growth rate

    Net-net one cannot cost cut to grow the business. Business growth requires “growth”. This is why I suggest that companies should choose to spend. Cost rationalization is important, questions are the discretion, putting costs in the right perspective and strategic decisions on these investments. This is the time when project costs will be more rational compared to a booming economy. At this tough time, many companies will look at cost reduction – what leadership across the globe must know is that – this is the time to look at a big picture and work towards completing the unfinished projects, starting the planned projects and reopen the businesses as usual after lockdown. Why? Because sooner we start spending on our planned projects, sooner economy will be back on track and most importantly we will be able to reach our projections, targets, and shareholder value.

    The concept of interdependent co-arising perfectly fits this conclusion. When we keep our investments on, the fund will be available to others to either spend or pay as salary. This spending results in moving the circle of growth.

    Related news – Cognizant to offer extra 25% of base salary

  • Six Sigma failed…







    “Not invented here syndrome” is like making a statement to Prof Moradian or Prof Natarajan that your forecasting methods is flawed it does not work in my industry, company or department. Is not it prudent to ask if it worked somewhere, how did it happen? Let us take an analogy –
    Organization = Laptop
    Department = Microsoft Excel (MS Excel)
    When I make a statement–
    “You know what,
    1. Mathematically, 2+2 is not equal to 4 in MY MS Excel therefore Mathematics is flawed
    2. My MS Excel is different from the rest of the world because 2+2 in not equal to 4 in MY MS Excel
    3. My laptop is different from the rest of the world because 2+2 in not equal to 4 in MY laptop”
    If 2+2 is not 4 in your Excel it is not that the math is incorrect, perhaps your algorithm or your laptop processor is at fault. In this analogy Mathematics could be Six Sigma. I have heard that IBM failed in implementing Six Sigma (late 80’s to early 90’s), GE is extremely successful, why?

    Lately, in one of our simulation class Akshat’s team questioned “why Six Sigma failed in our company in the simulation?” one of my teammate wrote on facebook – “After 3 round of simulation today Pravin Krd accepted the disadvantage of using six sigma as corporate project :-)”. I went back to basics to answer this question. What is six sigma? Six Sigma is about vision, philosophy, management system and achieving aggressive goals. Six sigma is also a toolbox and a means to satisfy customers. If Six Sigma fails in an organization it could fail due to – improper vision or management, issues with the goals or incorrect use of tools. The basic philosophy of Six Sigma is reducing defects, how can reducing defect be a failure in a company? If I ask you what you would prefer “good enough” with 99% accuracy or 99.99966 what would you prefer from the following?

    Three sigma (99% accuracy) processes –
    5,000 incorrect surgical operations per week.
    2 short or long landings at most major airports each day
    Six Sigma (99.99966% accuracy) processes –
    1.7 incorrect surgical operations per week
    1 short or long landing every five years

    Naturally, your answer to this would be better accuracy. Six Sigma is all about facts and working logically to reduce defects, and what follows is reduced cost, customer satisfaction etc. I am not a Six Sigma guru or I am not professing it, I am only trying to put some facts – “the six sigma way”. Experts can jump in and suggest or inform why six sigma could fail and share success stories.

    Source –
    Breakthrough Management Group India training on Six Sigma certification. This Data was a sample from USA.
    Class Blue ocean strategy simulation (BOSS)

  • Every problem is a nail… if you only have hammer in your tool box!







    In a class of Prof Moradian we were learning about a model, a model which had two dimensions. Each axis has ‘Low’ and ‘High’ as the extremes. I have learnt that for few thing quantification is not necessary, ok! When I saw this combination of ‘Low’ and ‘High’, I understood it is a qualitative measure. I waited for two minutes (a long duration for struggle in mind), at last a typical attribute of a classic personality came out.
    “Sir, how do I define a number is ‘Low’ or ‘High’ on this model and on the scale?”
    I took two minutes because I struggled to put this in my mind – ‘do not try to quantify everything’. I was thinking quantify or not to quantify? It was equally a struggle for Prof Lopez to teach me – don’t try quantification of everything. Old habits die hard! Six Sigma taught me to be data centric and this struggle has always been in mind – clarity with data or instinct with less or no data (I worked as TRIZ/Innovation consultant). Seemingly two different approach six sigma data centric and innovation instinct based.
    I knew it is qualitative, and Prof Mordian said – ‘Pravin, it is not necessary to quantify this measure, come out of the engineering mind’. To save my face I can say I was just questioning my assumptions, you may check possibility thinking and questioning assumptions blog.
    Let me come to the “classic personality” type. Personally, this incident was making the same mistake (of course learning from that too). The trait I want to highlight here is ‘engineerish’ e.g. engineer and mathematician type thinking. What else can you expect from an engineer – numbers, data, technical details and much more concrete information?
    Here, I came up with few future blog ideas of Blue ocean strategy, frameworks and problem solving. I will try to cover them in future. As I wrote in my introductory blog, not necessarily every blog entry will be on relation between Business and the Buddha. I will not offer correlation here, though I can do that. For a change I would quote a real life example which many of us are suffering from –
    Dr Mankad taught us in class of Macroeconomics that – few bright engineers turned MBAs have created many models e.g. financial models that ‘quantified rationality/irrationality’ which became one of the worst problems and resulted in the melt down.
    So, I write here a cliché of many management consultants – Every problem is a nail… if you only have hammer in your tool box! I also encountered it many a times. It is occasionally a struggle to pull people out of their thought process and make them realize that – some problems are not nails. Our myopic thinking can be summarized in (again a cliché) joke to explain the issue –
    Once mechanical, Electrical, Chemical and Computer science engineers were traveling in a car. Suddenly the car stopped and everyone was puzzled. Mechanical Engineer suggested that that there is some problem with the engine. Electrical Engineer suggested that it is due to the fault in ignition system. Chemical engineer said “no-no car was making some strange knocking and the problem was with the fuel.” Suddenly the computer science Engineer intervened and said “I think we need to go out and then come in the car (log out and log in).”
    The message is …
    “Every problem is a nail… if you only have hammer in your tool box!”
    And the lesson – “Because you have a hammer, don’t go searching for a nail”!!