An Evening with Dr. Marshall Goldsmith

Getting back to my blog after a hiatus.. and what better way to re-energize than a session with Dr. Marshall Goldsmith. I was privileged to be invited a conversation with Dr. Marshall Goldsmith held at IIM Bangalore last week, and what a session it was! For those of you who don’t know him, he is the author of bestsellers “What Got You Here Won’t Get You There” and “Mojo”, an executive coach plus one of the foremost management thinkers of our times.

The conversation¬†actually turned out to be a workshop cum interaction and I came back thinking what has been I missing.. and hence sharing the same with you all… A word of caution, if you have read his book ‘What Got You Here Won’t Get You There’ you may find pieces in this post from the book ūüôā

Nugget 1 : When you are in position of power/strength, your suggestions actually become orders. Remember last time you suggested something to your team member and he happily implemented it, turns out he may not have thought it through. Does it ring some bell ??

Nugget 2 : Some one comes up with an idea and you suggest some improvements to boost the impact. Turns out in most of the cases, you may have added marginal value but lost out a great deal on person’s commitment to idea, as the idea is not his any more. Unless there is a compelling reason to improvise on the idea, everyone may be better off with the person running with it.

Nugget 3 : Starting the conversion with “No”, “But”, “However”, etc. In most of the discussion when some one has made his point, we respond by saying this is a good idea/interesting point but. Please take a moment to ponder if that “but” has served you well over the years. If not, it might be a good time to chuck it out and create a more engaging dialogue.

That’s all for now !

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The Art of Sampling and Dangers of Generalizing

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While driving to work today, I was listening to radio and suddenly a claim by the RJ (Radio jockey) struck me – 77% of Indians think that the living room defines their home. This got me wondering, what was their sample set, how did they made this proclamation. They definitely haven’t surveyed all of India and got these results. Nobody does, it would be prohibitively expensive and time consuming to carry out this exercise. So, I thought of jotting down on my thoughts on how sampling is done, how do we extract/extrapolate results and the dangers which lurk behind in these exercises.

To start with us let us consider this textbook example – A company looking to launch a new product, does market survey to find out the demand in a particular region. They take a sample of 1000, 500 young and 500 older (30 yrs + ) and find that about 50% of them will be interested in the product. Buoyed by this they decide to launch the product in the said region and then truth hit home, only 20% of people actually bought the market. What could have gone wrong here – To start with a number of things.

For starters, the sample contained equal number of people from young and older folks, but what about their ratios in the general population. As it turns out there were only 20% young people in the region, but the sample gave them a representation of 50% and hence results were not reliable. There are two ways to address this – either get the same proportion in your sample set as in population or apply weights to get a better understanding of what people are saying. This is also one of the biggest reasons leading to so-called predictions about elections ending up way off the results.

The other thing to go wrong would have been the purchasing capacity of young people. If the sample consisted of a lot of college going people and the product in question was some thing like iPhone, which is pretty expensive in markets like India, then in all likelihood the survey wouldn’t throw up actionable results. And if that is indeed the case, then we need to change our sampling strategy and the methods which come handy are – Stratified Sampling and Cluster Sampling.

In stratified sampling you divide the population into multiple strata, and then take random samples from each of the strata. No strata should be left out and at the same time there shouldn’t be over-representation from any strata. The sampling needs to be random.

In Cluster sampling, you subdivide population or the strata into number of clusters and then you pick the clusters randomly in which you will conduct sampling. If the clusters are not picked at random, you run the risk of getting results you were looking for and not necessary correct insights from sampling. As you would have noticed that there may be some clusters where people will not be interviewed because their cluster is not picked up. This factor to an large extent is covered by random selection of clusters and doesn’t distort the overall picture.

Wow… that was lot of theory on sampling. Coming back to where we started off, why did I feel that there was something missing in 77% claim broadcast. Primarily because if there is a claim that 77% people like something, and then in all likelihood, if I talk to 10 people, 7 to 8 of them will agree to this theory, unless I am talking to all the people in my strata/cluster, who didn’t agree with it. I talked to some people at random and only about ~8% of people tend to agree with this theory. Do you see the danger of generalization and percentage here. I may have talked to just 10 people and if I one liked I have close to 10% fact !

Next time, you hear such a claim, ask a question, what was the sample size? how many cities covered ? A survey of 100 people at Bangalore Airport will not represent what India thinks in general. Remember (those familiar with Indian politics), NDA’s India Shining election campaign in 2004 general elections was based on such faulty sampling and went flat out at hustings.

Book Review – PhoneGap 2.x Mobile Application Development

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It was about two weeks back when Kraig Lewis of packtpub reached out to me do a review of the new book on phone gap they have published РPhoneGap 2.x Mobile Application Development by Kerri Shotts.  I was not sure if I could do justice to the book because from the title it seemed like a book targeted to developers creating mobile applications, and I have never been one. In my current product management role, I have been part of teams creating some really cool apps for iPads, but again I haven’t been the developer on the team and in my earlier days I was more of a C++ guy. So, I reached out to Kraig to understand if they would be ok with me doing a first impression rather than an in-depth review given my background and they were more than happy to accommodate that. So, here we go…

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My first impression going through some of the initial material is that book has a nice structure in place. It takes you the through the journey of PhoneGap framework with the examples and some of them you can actually use in your projects, so that a plus. The book also covers both iOS and Android which is another plus. On the flip side you do need to some programming background to get the best out of it. It is more focused on leveraging PhoneGap framework than teaching mobile app development, which is also pretty evident from the title itself. Overall, I would say that this book will be a value add to your ebook shelf, if you are in the field of mobile app development.

Decoding Big Bazaar’s Profit Club

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Last week I went to newly opened big bazaar store close to our home and was pleasantly surprised with a neat and clean store. Big bazaar stores in general are not very tidy and clean, most of it could be attributed to large number of customers they serve, but we are not here to debate the point. What happened after that was interesting. While I was moving around the store, I was approached by the store manager for the feedback on the store and I was more than happy to share my feedback as I was seeing a largely clean and evenly spaced big bazaar store after a long time. He also mentioned that they have launched a new scheme in which you can pay INR 10,000 to get the card and use it shop for goods worth INR 12,000. ¬†The scheme looked too good to be true and I made a mental calculation that I can use this scheme to do my monthly grocery shopping one shot here and save loads of money. And as happens to all of us, when we see a too good to be true offer, I made up my mind to get the profit club card that day itself to get bulk of benefits on same day shopping list. And then while picking up items from aisles, I noticed a big banner of profit club which detailed out terms and conditions albeit in a much smaller font as compared to offer and then I realized the old adage – “Devil is in details” and here are details. WP_000166 Joining fee : INR 100 (I am assuming this is one time payment) Upfront payment : INR 10000 Max Monthly shopping allowed per month on this card : INR 1000 => Implies that one would need to shop every month for atleast 1000 for next one year to get full advantage of this scheme. Let us now bring in the concept of Time Value of Money (TVM) concept and see the scheme is really worth it. First let us understand the concept of time value of money – TVM simply means that 10000 today is not same as 10000 a year from now. Say, if you had 10000 in your hands now and if you placed in a FD for a year and bank gave you 10% rate of interest per annum, then you will have 11000 with you from now. What this simple exam does is to illustrate that 10000 in hand today is worth 11000 if invested, ofcourse we took simple numbers to illustrate the point, but I guess everybody would have got the message. Now, if we apply the same TVM concept to Big Bazaar, the¬†purported saving comes down. For our illustration, let us assume that there is a monthly interest rate of 1%(we don’t want to take interest rate of credit card companies for calculation, they usually charge you 3%+ per month, a grand steal I would say) the current value of 12000 worth of goods come to 11255. If you will like to explore this on your own, do experiment with NPV formula in excel spreadsheet. Okay, so we have got down the benefits to 11255. Is there any thing else to add, ofcourse the parking charges and traveling. Let us consider parking charges only for now. They charge INR 10 for two wheeler and INR 30 for four wheelers. These charges vary with the city and the location, for our calculations let us take INR 20 as a parking charge every month, this will whittle down the total benefits to ~11000 on a expense of 10000. So, roughly a 10% benefit. You should also consider that there are forcing you to shop every month to get the benefit of INR 1000 spread over a year. Whether this is worth it is a call is your call.. Now let us shift gears and try to see what does it have it in for Big Bazaar. Here are the two things I can think of –¬†First is Working Capital Management (WCM). For layman, ¬†Working Capital is the money companies need to run their day to day operations. Much of it is in form of credit the companies receive from its suppliers and some of it is in form of bank loans. The companies which run their businesses really well are those who work on negative working capital, funding their day to day running from suppliers, buyers etc. Big Bazaar seem to be going that way by taking advances from its buyers to fund its business. Second big reason is that they are binding the card holders to shop with them for next one year, a kind of forced customer loyalty which may pay rich dividends. My thoughts on the profit card scheme – It is not a groundbreaking profit scheme for consumer but seeks to bind consumers into shopping with big bazaar for next one year. Not sure if it will really take off – need to wait and watch.

USP/Points of differentiation : Quikr vs OLX – Any one ?

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I got thinking about the Quikr and OLX the other day after watching their TV Commercials (TVC) back to back. The TVCs looked very close to each other, the takeaways from both the of them were very close to each other, nah, exactly same – If you want to sell anything come to Quikr/OLX. Both of them targeted to sellers and drove home the point that it is very easy to sell on their portal. So, I asked my wife, if we have to sell our book cabinet which one should we go for and her response – Go for either, how does it make a difference – exactly my thought. And to make matters worse, both of these TVCs repeat with amazing frequency one after the other.

Then I decided to take a closer look to figure out if it is really so and what better way that using powers of¬†Google¬† I searched for “Quickr”, yeah you read it right – it was intentional on my part to start my search with a mis-spelt word and guess what I found. Hold your breath — On the top of search results, there were two sponsored search results as Google calls them or advertisements in plain english. The first sponsored search was OLX, yup, not Quikr but OLX. The second result was Quikr. I then repeated the search with “Quikr” – this time the correct name. And not¬†surprisingly Quikr turned up as the first sponsored search result, followed by OLX. Some one at OLX has surely placed his bet correctly for keyword search with Google.¬†Now was the turn for search of OLX, the results not surprisingly OLX as the first sponsored search result followed by Quikr. This leads me to believe that even their Search Engine Marketing (SEM) strategy is closely following each other with OLX coming out more aggressive out of two – coming on top of OLX with the mis-spelt Quickr searches.

Coming back to my original thought – both OLX and Quikr seem to be locked in a circular sort of battle, with each closely following the other. I am sure that both of these companies have some really smart guys looking after their brand strategies, but for an outsider it does seem like they are either following each other or fixated with each other, whatever happened to focusing on “points of differentiation” which¬†MacMillan and¬†McGrath so¬†passionately¬†argued for in this piece from HBR, way back in 1997 —¬†http://hbr.org/1997/07/discovering-new-points-of-differentiation/ar/1

The Great Indian Air War-Fare

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Yeah you read it right ¬†– It is warfare over ” Air Fare”.

It all started one fine day when SpiceJet sprang a surprise by offering 10 lakh air tickets for Rs. 2013 over a three day booking window (11th Jan Р13th Jan) with travel to be undertaken between 1st February and 30th April 2013.  The mad rush for bookings brought down the SpiceJet servers which is another story, but what it did to air travel industry is more interesting. The timing of the offer was on the spot, the air fares were soaring, the Feb-April time duration is anyway slow period for airlines, enabling SpiceJet to sell a large chunk of its inventory, ensuring higher load factor for the airline in advance. A dream for any airline operator.

But what it also did was to disturb the status-quo in the airline sector. It was just a matter of time before others responded and Jet Airways did exactly the same. Jet Airways launched its promotion over a six day booking window (Feb 19 РFeb 24)  for travel anytime till the end of year 2013 and offered twice the number of seats offered by SpiceJet. As soon as Jet unleashed its promotional offer, Indigo and SpiceJet retaliated almost instantaneously to lower their own fares, effectively bringing down rates to the same levels as the Jet.

This is the part of story we all know and have seen and heard. So, why this post. In this post ¬†I will like to use Game Theory to try and understand why no body responded to SpiceJet’s initial offer and what changed when Jet Airways came up with its own promotional campaign.

To understand this let us assume that there are only two restaurants operating in a locality, and any change in one’s strategy impacts others profits and let us say that following is each ones pay-off matrix, I will explain the payoff matrix in a moments

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