Sustainability - 2 major strategies ..

When we look at development economics that has evolved over the years since the time of Thomas Malthus, we find two of them having really diverse and often opposing viewpoints.

“Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio.” —Thomas Malthus 

Robert Solow, the 96 year old MIT Emeritus Professor in Economics, '87 Nobel laureate, has this to say about how development happens in the world. 

“If it is easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.” —Robert Solow

Robert Solow unlike his predecessor, Thomas Malthus believes in the power of technology and Innovation.

These are 2 most influential development economists of the world putting out their  strategies or streams of thought on how the modern world views the environmental sustainability challenge we face today.  

The Malthusian statement says that if the population of the earth, growing at a geometrical ratio, starts utilising the limited resources of planet earth which is improving only in a linear ratio, ie. incremental improvements, by way of improvements in efficiency, utilisation ratios etc., then we are in for major catastrophe. In other words, Malthusian theory believes that limits to growth are imposed by nature and cannot be overcome by man. Malthusians are looking at the development phase of humanity from a reactive position, trying to minimise usage of resources.

 

Solowians, people following Robert Solow's principles, believe that technology and innovation can stretch scarce resources further or help us to get more output from it. Technology and innovation can help us use less of natural resources or get more output from scarce resources. Exercise of human ingenuity appeals to natural optimism and is a great proponent for deregulation and promotion of growth.

For example, improving fuel efficiency in an engine is a Malthusian approach to improving the ride, while developing and building breakthrough innovation product like a solar powered car is a Solowian approach. 

The Kyoto Protocol which insisted on forceful imposition of emission cuts and Carbon credits was a product of the Malthusian approach while the 2015 Paris treaty which insisted on voluntary actions from countries to limit CO2 emission by way of developing and using new renewable less polluting technologies like solar energy is a Solowian approach.  

The interesting supporting work for the Solowian approach by 2018 Economics Nobel laureate Paul Romer on integrating climate change and technological innovation into economic analysis who argues that growth has got no natural limits and the capacity for technological innovation  is unlimited. The value of spillover as propounded by Romer, mentions about the benefits in other fields due to developments in a particular field. For example, developments in space technology and exploration has helped us improve in the area of geographical locationing and mapping, search for minerals etc on earth. Similarly developments in the Internet has spawned lot of improvement in the area of electronic retailing, growth of web based commerce across the world. 

The invention of the transistor led to the development of the Integrated circuit chip that paved the way for the growth of the digital world and more specifically, the mobile phone revolution. The green revolution in the late sixties paved the way for improved agricultural productivity and output that helped save many a human life and improved our general health and standard of living. 

With great innovations entering the world, be it the electric car or driver less car, the potential for innovations to to serve human needs is limitless. Prof. Robert Solow still believes that human ingenuity and innovative mindset will find a solution to the environmental sustainability crisis that is gripping mankind now.

 

The author wishes to thank Roger Martin and Alison Kemper for their HBR article of April '12, Saving the Planet, the tale of two strategies. 

George..

Learning from Failure ..

Recently I asked some of my old colleagues who are in the pink of their career, and from great institutions, whether they had any failure in their lives. Most of them have moved from failure to failure, to rise up in their career but some of them have not had any failure and they are still holding on to their first job. I started the discussion by saying that I am now in the eighth job, enjoying all the while and have spent eight years on this eighth job. 

In my career so far of 34 years, I have changed jobs eight times  spent two years for my PG and five years at IIT Bombay pursuing a PhD. If I had stuck to my original job and had not moved out, I would not have met so many great Professors and learned people, great colleagues, would not have had so many great experiences, would not have learnt from it, would not have read and learnt new concepts, thought processes and would never have gone through so many enriching life experiences. 

The quote by Henry Ford , (at the right) one of modern industry's greatest doyens of the twentieth century, has a very level headed quote about failure. He says, Failure is nothing but a chance to begin afresh more intelligently.

I have had my share of failures in all these 34 years, and there has been a fair share of learning too. What has failures taught me ? To stay calm and cool, analyse the failures, learn from it and take the next step carefully trying to conquer still greater goals.

Bill Taylor in his article in HBR November 2017 (click here for the article, How Coca-cola, Netflix and Amazon learn from failures) speaks of how great companies view failures as stepping stones to success, why great companies need to make more mistakes and embrace more failures. 

Learning from failure involves two aspects - omission bias and loss aversion.

Omission bias - most of the employees feel that if they start something new and if it fails, the setback might damage thjeir career. So they tend to take it lying low, not willing to take chances.

Loss Aversion - always play to win, not to lose. These people feel, the pain of loss, is double the pleasure of winning and hence would never accept failure and do anything that might result in failure.

The casualty from both the above thought process is, unwillingness to try something new, experiment or innovate. These people are satisfied and happy to continue with their present lives and would not desire to ever topple it .

Quoting from the HBR paper, a couple of important points are listed here. 

• There is no learning without failures and no success without setbacks
• People who have failed and learnt from it are LESS FRAGILE, and more daring than those who expect perfection and flawless performance.
• If one is not prepared to fail, one is not prepared to learn. Unless people and organisations are prepared to fail and learn as fast as the world is changing, they will never keep growing and evolving. 

The most important point to stress here as is being done by Coca-cola, Netflix and Amazon, motivating their employees to come up with daring ideas. Experiment with them, put them into action, if it fails, learn from it, move forward and grow.

 If employees do not have to worry of failure and is able to learn from it, the organisation is nurturing a learning organisation, one that can survive the shocks of everyday life, innovate, grow and shine into the future for many decades.

George.

Amazon Alexa or Google Home, who is leading .. ?

 Tracking the impact AI pods like Alexa and Google home make in our lives, I have been using Alexa and Google Personal Assistant since 2017.

Click here for a controlled experiment I did on both to find out who is smart .. Alexa and Google were moving together at that time.. 

Click here for a Forbes link on who is better ..

• 
  Networking capabilities : Regarding information search and retrieval, Google Home / Personal Assistant is very forward, but for networking with other hardware, Alexa is far ahead of Google. With Alexa you can network with multiple hardware and issue almost 100,000 +  recognisable commands, Google is no where near. Networking with Syska smart bulb was cool for Alexa.
  
• Understanding Indian English dialects : Alexa still finds it difficult to understand Indian English dialects but Google Home has no problem at all. I tried with different Indian english dialects and found Google Home response was fast and accurate. Alexa failed in this regard.
• Making calls : While asking Alexa to make calls, it replied it could make calls only within US, while Google Home did it easily for me from my mobile.
• Speed of responses : Google Home was very fast in getting responses because of its vast information repository, while Amazon had to rely on Wikipedia to come out with responses and hence was a bit slow. 
• Music search : Google depended on it's Youtube for searching music which was a bit faster than Amazon Alexa, though both had a great variety of music. Alexa depends on Amazon Music.

Click here for my earlier 2017 writeup on Alexa and Google Home .. 

I am very much in favour of Amazon Alexa, though I am sure in the long run, Google Home will catch up with Alexa in its AI capabilities ...

 George ..

 

Amazon - going skyward ..

As per data from fortune.com, as of Oct '20, Amazon has climbed to be the second largest American (ninth largest global) business entity (click here for American list) in terms of revenue at $282 billion, profits of $12 billion, behind Walmart at #1 (revenues $524 billion, profits $15 billion) and ahead of Exxon Mobil at #3, (revenues $265 billion, profits $14 billion) ..

With an employee base of 0.8 million compared to Walmart's 2.2 million, it's profit to revenue is 4.1%.

Amazon additionally has a market capitalization of $1.58 trillion which is 4x that of Walmart at $0.39 trillion..

Clear pointers to where the future is, ie. e-retailing ..

Amazon alone sold about 12 million products (excluding books, media, wine and services) and 353 million products at the Amazon marketplace ..

With 150 million customers for it's Prime delivery and entertainment subscription, Amazon is destined for great growth in the coming years. 🙏👍

 

This morning when I logged in to Amazon, it announced that 0.5% of the value of my purchase from now onwards will go for charity.  Accordingly I have chosen an India Education fund at Amazon to give all my donations.

 

I find that Amazon globally has had a great third quarter last year with global sales touching $96 billion. It is expected that the fourth quarter of 2020 will bring in more revenues for Amazon, something to the tune of $112 billion. The total revenues for Amazon for 2020 will mostly cross $350 billion.

This will give you an idea of the top global 10 .. (all sales in $ millions) (Oct 2020 data .. www.fortune.com)

1. Walmart $523,964 (retail - physical and online)

2. Sinopec Group $407,009 (energy - oil and gas)

3. State Grid Corp of China $383,906 (energy - electrical)

4. China National Petroleum $379,130 (energy - oil and gas)

5. Royal Dutch Shell $352,106 (energy - oil and gas)

6. Saudi Aramco $329,784 (energy - oil and gas)

7. Volkswagen $282,760 (transportation - terrestrial)

8. BP $282,616 (energy - oil and gas)

9. Amazon.com $280,522 (retail - online)

10. Toyota Motor $275,288 (transportation - terrestrial)

Of the top 10 global corporations (click here, given above), we find

• 6 are from the energy sector
• 2 are from the retailing world, one physiocal and the other online and
• 2 are from terrestrial transportation area, automobile giants

Of the top 10 Fortune companies (US listing, click here) we find 

• 4 are healthcare companies
• 2 are retailing cos.
• 2 are technology companies
• 1 energy and 
• 1 conglomerate into insurance, tech, healthcare, clothing etc.
  

while in the top 10 Fortune companies global listing, there are no healthcare companies.  Another significant company that is missing is one of the promiosing AI companies, Alphabet (parent company of Google) which is at #29 global rankings and #11 in US rankings.

George..

Narayana Hrudayalaya ..

Narayana Hrudayalaya continues its forward march unhindered ..   

I had the class case discussion this morning (28 Oct '20) with MBA sem 3 students. 

NH has satellite centres across the state of Karnataka where patients at remote places are connected to specialist doctors in NH over satellite links for the first examination to decide whether the patient needs immediate attention at Bangalore or can take treatment at the remote locations. NH has expertly aligned high technology to help in offering high quality medical care to the patients.  Unlike in a mall where depending on the customers, new counters can be opened to handle customer traffic, in hospitals, due to the nature of specialisations, often it becomes difficult to identify and employ medical area experts as fast as in malls or stores. Queues therefore become inevitable.

Click here for a case study ..

The students had two issues to raise reg the NH care.

1. A recent case of a patient not getting immediate care citing following  Covid protocol for treatment because of which the patient died. NH would have been unaware whether the patient was suffering from Covid due to comorbidity and hence considering the safety of the healthcare professionals and other patients in the hospital, doctors would have insisted on Covid test certificate of the patient. It is sad that an unfortunate incident had to happen.

2. No proper planning as demand often outstrips the capacity, particularly at the dental dept and patients have to wait for hours on end.

In general, the healthcare system in the country has to develop a lot to match with those in developed nations. Some of the issues are highlighted here, for followup by the authorities.

1. While Corporate hospitals are after money, the govt hospitals in most cases are in a a very despicable case, either poorly funded or badly mismanaged. . 

2. Most of the time hospitals hear that a patient is covered by insurance, the hospital asks the patient to take necessary and unnecessary tests to help identify the issue - an ethical issue. Are the tests really needed or not ?

3. While in the west healthcare has been given preference, upto about 14-15 % of budget outlay, in India it has been woefully low over the years and is slowly beginning to pick up. We have less capacity in comparison to the demand.

4. The VVIP culture which is widely prevalent across the country, more often than not, disturbs the needed patients at the hospital waiting for care. The VVIP culture has to be stopped across the country.

Amazon, Flipkart and E-commerce bringing a change in people's lives ..

 Ever since the country went for a lock down in mid march, I have not visited any major store for shopping. It has been provision stores, vegetable stores and milk booths, no where else, that too rarely. And who is able to manage most of my shopping for me ? It has been Amazon for the past seven months, and of late Flipkart has also been added.

It is because of the social distancing and less willingness to experiment and try with new operators. We have been looking at safe methods of shopping and Amazon and Big Basket fitted the bill perfectly. As our dependence on both of these sites increased , I was worried whether their performance would fail. I was proved wrong again. Not only have they met my expectations of great customer service, they have in most cases exceeded it.

One area where I found both Amazon and Big Basket giving their best performance has been in the area of ON-TIME DELIVERY.  If they promise a time and date, delivery will inevitably happen on that day and time.

This timely delivery helped the customers in many ways - 

• This enabled customers to plan for other activities in their work life. 
• The timeliness in delivery actually eased the customer's life (variability in the delivery process was low)
  
• reduced tensions because of  late or no arrival. 
• for vegetables and home provisions one could do deep planning for the next two weeks on what to purchase, when and in what quantities
• accordingly money kept as stock at home for emergencies, got reduced or was released for other functions, as emergencies or shocks were less. In other words, as variability of the ordering and delivery process reduced, it led to better inventory storage policy, inventory accuracy and less wastage.

Amazon has been offering products at great discount to market prices resulting in direct benefits to the customer, this was another reason for customer satisfaction. 

Amazon and Flipkart continue to surprise us with their wide variety of offerings.

As customers shops we have not visited during the past six months may never find us in their premises, because Amazon has disrupted the system very much. It has disrupted the shopping behaviour of customers in ways that have changed our lives for ever. 

The cost benefits of low petrol consumption, no driving vehicle, no waiting, no traffic, no vehicle damage in case of an accident, in the process reducing chances of Covid infecton, avoiding waste of time and additionally cost benefits from Amazon has made shopping more comfortable and attractive for us through Amazon and Flipkart.

E-commerce is here to stay as is online teaching and on-line meetings .. ..

George..

The Six Forces Theory of Competition

All of us have been conditioned to the Five Forces Theory of Competition proposed by Prof. Micheal Porter from Harvard Business School in 1979 through HBR. (click here)

 

Two generations over the past 41 years have been made to believe that this theory is sacrosanct and cannot be challenged. Being a global strategy expert  and a product of Harvard Business School, his words remained unchallenged over the past many years. 

After 41 years, is the same model still valid ?

While Porter only speaks of the supplier, the end customer and their bargaining power, he has conveniently forgotten to mention the impact of Supply Chain partners in improving the profitability of the product or service and thus making it competitive.

 

The SC partners have a major role to play in influencing the final costs by as much as 15 - 20%. 

 

The recent growth of China in the global scene as a cheap factory of the world raised many a doubt. It is now common knowledge how the Chinese government saw to the shipping of the product from anywhere inside China to the nearest sea port free of cost, which resulted in reduced landing costs of the product in any other port of the world. The reduced costs at foreign ports saw the growth of Chinese exports throughout the world. 

 

Click here for an interesting paper that reveals that supply chain costs do provide a competitive edge for products and producers.

 

Porter's Five Forces model of Competition

Similar is the case in all industries. Supply chain costs are an important cost component in any competitive industry. One of the major reasons for outsourcing to India, China and Far east, besides high cost of labour has been the high supply chain costs in developed countries.

 

Only Marketing Professors have been looking at the competitive forces all this while. Now that Operations Professors also have started looking at the forces that finally shape competition, it is an inevitable fact that supply chain costs do constitute an important part of the costs of the product and hence the competitive positioning of the product. 

This is my humble submission and hope Prof. Porter considers this major force and cost important in his analysis and suitably modifies his 41 year old theory.

George 

Helping prevent job losses during Covid time ..

Covid time brings many stresses in personal and family life as for many income flow is strained.

As many as 41 lakh youth in the country lost jobs due to the COVID-19 pandemic while construction and farm sector workers account for the majority of job losses, according to a joints report by the International Labour Organization (ILO) and the Asian Development Bank (ADB). Economic Times, Aug 18, 2020

Due to poor customer arrivals at seller premises, less patients in hospitals , students in educational institutions etc., and the resultant loss of revenue,  organisations are forced to cut on the number of employees in the organisation.

I am aware of organisations in Bangalore giving employees half pay as customer orders are not being fulfilled, supplier replenishments are not coming. Even though entrepreneurs would want to keep their employees employed and busy, due to the Covid situation and resultant processes to isolate employees to their homes, for fear of spread of the virus, organisations remain closed for want of workforce. We find the whole supply chains for many products and processes have been disturbed.

What is a solution to this ? While going through the October '20 issue of HBR, (click here) I came upon an article that spoke of an innovative way to keep employees engaged and employed by asking healthy employees in hospitals to visit the areas of demand, ie. customer premises of patients, to help keep the hospital business up and running.

Even though this is just a suggestion, it is worth emulating to see how it works. Maybe, educational institutions can ask their healthy faculty members to move across the country to cities that have large concentrations of their students, rent premises in those cities, stay in those cities and engage classes, till the end of the Covid crisis. This way the students need not travel far and expose themselves, while more responsible faculty members can keep the students engaged.

Being an innovative suggestion, Universities and educational institutions around the world should explore the possibility of this idea at least till the end of the Covid crisis. This will make the customers feel that the organisation is really customer friendly.

Not only hospitals and educational institutions, other service oriented organisations should try this option. Government officers could visit the houses of the public, understand their concerns and address them.

This will also be a training at how organizations can be more customer responsive in case more severe  lock downs do happen in future. 

george.

Quantum Computing - what it means to the modern world ?

 While referring through some interesting articles, I decided that I shall write some thing on Quantum Computing in the next few days.

Quantum computing is the use of quantum phenomena such as superposition and entanglement to perform computation. Computers that perform quantum computations are known as quantum computers.- wikipedia

Here is the first link from MIT Technology Quarterly (click here)

Are you ready for Quantum Computing , HBR link (click here)

Here is what IBM has to say on Quantum Computing (click here)

This is what New Scientist has to say (click here)

I shall be writing shortly on how Quantum Computing is going to influence the business world in the coming decades.

How is Disruptive Innovation different from Break-through Innovation ? The 4 types ..

Innovation is the watchword for all management gurus the world over.  Gary Hamel in his famous HBR article of 2006, The Why, What and How of Management Innovation, spoke of the different aspects of innovation that was very path breaking. (click here)

Gary Hamel say that Management Innovation creates long lasting advantage when it meets the following three conditions

• 
  the innovation is based on a management principle that challenges management orthodoxy
• it is systematic encompassing a range of processes and methods and
• it is part of an ongoing program of Innovation where progress is compounded over time
  

Greg Satel in 2017 by his paper in June 2017 HBR (click here) tries to illustrate the major types of innovation based on two dimensions, how much one knows of a problem and of the skills domain

Disruptive innovation at first disrupts in a small way, often offering a very low quality alternative. But over time it improves and finally overtakes the original product in quality and captures the whole market.

Examples are many (click here..)

Steel mini mills, smartphone cameras, video streaming services etc are examples of disruptive innovation.

Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses - Christensen, Raynor, McDonald, HBR Dec., 2015 (click here).

Disruptive Innovation we find thus happens when the problem is not well defined but we have enough awareness of the domain. It is placed at the bottom right in Greg Satel's Innovation matrix. It starts in undeveloped markets initially and matures to disrupt the market leaders and finally dislodges them. 

Nobody thought the video streaming services would disrupt the CD industry as such, but slowly by delivering sustained better service over years, the video streaming industry dislodged the CD industry. Similar push we see in the area of smartphones, now phablets (phone+tablet), they have already displaced the desktops, slowly are into displacing the laptops too. 

Referring to Greg Satel's Innovation matrix, we find Basic Research happens when we have low knowledge both of the problem and the skills in the domain needed to solve it.  Basic Research is thus left to academic research labs and for research grants to look into. There may be promising results but more often than not, the final picture is not all that rosy and promising.

Breakthrough Innovation happens when the problem is well defined but the domain has not, thus the problem is hard to solve. It helps expose the problem to diverse skills domains.

Sustaining Innovation on the other hand happens when the ecosystem is very open and clear, the problem is well defined and the domain is also well defined. Traditional labs fall in this domain.  Design Thinking exercises can be extremely successful if both the problem and the domain are well defined. (Click here for some excellent Design Thinking exercises we have done in the class in Alliance University in Bangalore, India with students)

The awareness of the different types of innovation happening around helps us to have a deeper understanding of the Innovation landscape and what contributes to each type under what conditions. 

Disruptive Innovation is more like a snake in the grass strategy. The snakes waits in the grass unnoticed till it gets the right opportunity to hit at it's prey. Disruptive Innovation idea is like a snake in the grass. It waits for the opportune moment and strikes at the leader dislodging him from the position and in fact, toppling an entire industry even. 

An awareness of these types of Innovation thus helps us to observe an organisation to understand at what stage it's Innovation process is and what needs to be done to get it on track, to help put it on track to problem and domain definition maturity, sustaining long term innovation. This feeds the next set of innovations.

Why Product Life Cycles are important ?

When I was in College, I used to work with 5.25" and 3.5" floppies for storing data. These days those floppies are not to be found, instead we have CDs or the pendrive and more recently everything is going to the all pervasive CLOUD .. The earlier typewriters, VCR, analog cameras etc have all disappeared -  they have gone past their life cycles. Products have their life cycles.

The product life cycle (PLC) is the period of time over which an item is developed, brought to market and eventually removed from the market. It is an important tool for analysis and planning of the marketing mix activity - ijert.org

Click here to understand the different stages in the Product Life Cycle ..

How can we prolong the life of a product ? What are the benefits that acrue to the organisation producing it ? What are the bad impacts of not allowing things to die out a natural death ?

What is the role of innovation in shortening the PLC ? What role can Operations play in the PLC ? Is prolonging of the PLC beneficial ? Does customers have an important role to play in deciding the PLCs ?

I was surprised to read the other day that the PLC of an electronic consumer gadget is just 7 months. ie. right from the start of the design, to development, useful life and withdrawal stage, it is just 7 months. The manufacturer thus has to plan to plan for an effective 4 months effective product usage period in the market which yields the greatest returns. 

PLC analysis thus needs to be carried out to ensure better returns.

George  

How can digital twins benefit modern industry ?

We hear of the term digital twins quite frequently these days. These days it means high capability simulation models with extremely powerful visualisation capabilities. Digital twins are used for monitoring the real world virtually.

A digital twin is a digital replica of a living or non-living physical entity. Digital twin refers to a digital replica of potential and actual physical assets (physical twin), processes, people, places, systems and devices that can be used for various purposes. - wikipedia 

Digital twins are usually considered for highly safe and secure processes like an aircraft engine in flight. Rolls Royce from UK deploys a “digital twin” – a complete, life-size virtual copy of a physical Rolls-Royce engine, at its labs in Derby. A Trent aircraft engine has a digital twin on which what if analysis is carried out to identify and eliminate possible threats and risks from parts failure. This digital twin of the actual engine which is in flight, takes into account and visualises the stress, strain on body parts by clocking the hours of flight and highlights possible failure of parts, early enough warranting replacement or service, avoiding major accidents.  ..

Just thirty years back, computer simulation was a very fancy word, done only for expensive parts, buildings etc. The hardware and software for such experiments were very costly for the average industry and common man.  When I did higher studies in Industrial Engineering back in mid 80s, the digital computer simulation exercises, besides the analog computing exercises that we had to do, were done on PC/XT, PC/AT and Intel Pentium 33 MHz machines. Gone are the days now, we have very powerful phones that work on faster processors at speeds thousand times faster than those days, just thirty years back.

The Samsung M30S phablet (phone and tablet) gives me the comfort of a smartphone and at the same time, the richness of experience of Internet browsing on a very optimised screen area (screen ratio > 91%) with high resolution text and image reproduction. Working on the Exynos 9611 (4 core/2.3 GHz and 4 core/1.7 Ghz processor) with upto 16 GHz max processing speed. (click here..) It will be a treat to play high end graphics games on these phablets, as they give both speed and the concenience of a large screen for the players to manipulate their actions.

 The tools of today can be used to do large volume 3D modeling and high quality graphics visualisation using the present tools with the common man. What this tells us is that the coming days we can expect great many areas being pervaded by the digital twin concept to effect in performance and efficiency improvement, also in improving safety and identifying and reducing wastes.

Graphical simulation and visualisation tools have been extensively used in Operations Planning and design, Process Improvement, Design and Manufacturing collaboration, training and communications and marketing exercises. Click here for an HBR doc from Oct '20, explaining how computer simulations these days are getting better and affordable.

Digital twins are here to stay for improving safety, predicting and reducing failure, thus saving lives and reducing costs.

George.