Show is going on!

Apple reported its highest quarterly revenue and profits number ever. It briefly surpassed  Exon Mobil as the most valuable company in the world. Its cash reserves are sufficient to buy the top tech companies (refer pic) at 10% premium. Its revenues are greater than GDP of 105 countries in the world. And its profits are equivalent to the profit of Google, Intel, Microsoft and Yahoo combined. The picture below from WSJ summarizes it accurately.

Putting this into perspective with something I wrote in 2009 - The show must go on. Well indeed the show is going on.  Since then Apple's revenue have grown from a modest $10 Billion to $46billion in the quarter ending 31st Dec 2011. Cash reserves have grown from $28 billion to $97 Billion and gross margins have increased substantially.

And of course the juggernaut keeps amazing us each day. Apple has continuously kept changing their business model before people could fathom and created an enchanting eco-sphere for all their products and services. IT JUST WORKS!! And thats where the idiosyncratic Steve comes in. He was able to see/approve the model, much before anyone else could. Tim Cook, handpicked by Steve Jobs himself has taken over the reigns seamlessly. And he is got a tremendous team in Phil, Scott, Oppenheimer and Williams to take on the mantle. 

But its still too early to do away with the concerns raised in my earlier post - The current product portfolio and product pipeline can easily sustain the momentum for roughly another 2-3 years. And things will be pretty smooth till that time. Apple though needs to continously reign over and change the paradigm as it has been doing. It has got some amazing people who are capable of doing that but will they be crazy enough to do it? The answer I am hoping will be YES!!

P.S: I had a brief debate with Ankush on which company has bigger impact on our lives - Apple or Google. Well my obvious answer is Apple simply because they created the PC world in which the need for Google arose. And even if people don't use Apple products directly most of the tech products today are reflection of Apple's though leadership in design and technology. So, vote you heart out  on the Poll available on the right nav of the blog. 

The Work Bubble Concept

After what happened in 2008, we all know what an Asset bubble is. I am sure we knew it before that also but the glamor quotient came only after 2008.

Well, today I will expose you to what is a "Work Bubble". As you would have guessed, its not a complex phenomena which needs experimental evidence to be proved. Its just an abstraction of what we see around ourselves sometimes, typically in large organizations.

The genesis interestingly lies in the following simple traits of human behavior

1. Everyone wants to save their ass - No one wants to own up anything. Everyone always wants an excuse in case things go wrong.

2. Everyone wants to find work where there's none - Well does it need any explanation? People have to justify their salaries.

Its like disguised employment. Bringing in an analogy, work bubble means creating an illusion of work when there's none and charging the customer for that.

Now a visual representation of what I want to explain:

This is more like the ant story we have all heard/read here and there. But what does this entail?

This entails polynomially less "actual" work than portrayed out to be. Polynomially more costs , polynomially less efficient solutions. But do we care?

What this leads to is a false belief that things are on track because you are measuring the wrong things to track progress. Instead of measuring the actual work done, we measure the number of documents made till now, lines of code written till now, and taking a little more liberty sometimes we also tend to mention that meetings which we have held till now to showcase progress. Nothing could be further from the ideal scenario. In this respect, Eric Ries (a champion of this cause) is coming up with some amazing tips and a book.

At the end of the day, its about communicating clearly and getting the things done. No doubt communication is most critical and cannot be undermined. For sure, without consensus things cannot progress. But how much effort you need, to make communications simple and scalable. No doubt there will be some necessary non value adding activities.But in its guise of communication so much non value added activities are authorized by design that its close to appalling. 

Its like a Ponzi scheme. When everything is hunky dory this doesn't matter. However when going gets tough, pressure is exerted on the bubble. And for those of you who have studied surface tension, would appreciate the distress of a bubble under such pressure. Unfortunately this bubble is more thick skin and takes more time to bow out but bow out it shall.

Why it matters in IT?

Work bubble will not be a nuisance in industries where we don't have headcount linked revenue model.However,  IT services is in one of those phases where currently the prices are moving from transient to  stabilized levels based on the nature of work. Hence commoditized work would have downward pricing pressure and upward cost trends. On top of that, for the foreseeable future the incumbent model is here to stay. In such places, cumulative work bubble impact will become huge and almost wrecking for any organization.

Here's hoping that this bubble will also burst sometime and unlike the Financial industry which is back to its perilous money making ways, the tech service industry will actually come out stronger with better frameworks. Though they are being adopted to solve other problems , approaches like MVP, Agile, SCRUM are the way forward in cleansing the mess. Hoping these will not get corrupted.

Tell the truth - It ain't too bad

Here's something for all you budding HR folks out there. I hope this amuses you enough to effect some changes in whichever organization you are in.

I hate to break this to you but its immaculately true - 'We discuss our packages within the team'. Yes our network is so strong and so fool proof. So, I don't know what one really tries to accomplish by treating the salary information as a 'Holy grail'.

My contention is this - If one is so confident about one's processes and the outcome, if one is so sure that the CTC actually reflects the value gained from the employee's job description, if one is so sure that there is little subjectivity in the system and all actual outcomes actually mirror the complex algorithms written to decide the quota, hike % etc, then there is NO reason to hide it. Unfortunately all the mathematics is just meant for the documentation whereas the actual scenario is completely different.

Why should compensation be hidden from other people. By hiding it, one creates more suspicion than faith. By hiding it, it becomes all the more clear that the remuneration is not based on the factors that are sung along in every god damn ppt by the management but some other adhoc scenarios. I understand there are pressures. I understand you work with some unreasonable expectations in terms of lead times and numbers when it comes to sourcing. So say it. Make it known to people that your salary structure is not meant to appease people and display the illusion of equality. It's market based. Whats wrong in admitting that. Unfortunately this comes up only in one to one discussions with HR managers where they put their case. Why this hypocrisy? Why this display of people caring when all you are concerned with is the least cost to company.

You know it, employees know it, even your CEO knows it!!

Here's some thing your senior management will never say - Being concerned with least cost to company is not wrong if you are getting the same talent. Get up today and CHANGE! Make it a honest place!

Rather, I would suggest a novel approach. Reach out to people really interested in the job profile. Make work interesting not by having Friday dressing (do tat by all means) but seek out people who love the work they do. And you will elevate.

Disclaimer : I know it happens in other areas as well. But HR is a good place to start

Solution should not hamper the GOAL

OK fine.... you are facing certain problems in achieving your goal. And then you come up with a quick fix solution and everybody eulogizes you as if you are the next 'Micheal Porter' .But please check if the solution to that problem is taking you farther from the goal. If it is, please acknowledge the solution is imperfect. Be cognizant of the fact that your process is flawed and now you are not achieving the goal you set out to achieve.

A case in point is Group Discussion. Sure, they might be a necessary component of certain kind of recruitment but why they have become a way of life for all the recruiters now days is because it helps them to manage scale. I refuse to believe that every kind of job these days requires GD. It is a filter with probably the wrong kind of holes in it. It does not matter what kind of job you are getting into. You will definitely go through a GD because there are many applicants and interviewer does not want to interview everybody. Sure, this is a problem but is GD the right solution ? Before you know, you have started justifying the need of a GD and correspondingly changing the job description. And above all owing to your immense faffing skills you have everyone on the board convinced about it.

You add an activity to solve a problem and now to justify its side affects you start tinkering with the end objective. Everything is a mess now.

The answer to the question - "Why do we need a GD?" should be testing certain skills one cannot test in an interview. The answer should not be that there are too many applications. If this is the reason, you will most likely NOT get the best person from the lot which obviously was the goal. If after the process you think you have got the best - You are fooling yourself. In this case, the GD is not only a waste, it is your adversary. And the inherent nature of such adversaries is that they continue to be a part of the process hiding clandestinely - unnoticed and unknown. You will do better to track them down and eliminate them.

The goal of the modified process is not to get the best person anymore. It is to manage large numbers. But give it a thought is that what you actually wanted !!!

Amazon's experiment with business model

An article in McKinsey Quarterly mentions De-bundling of Production from Delivery. It has been proclaimed as one of the main technology trends going forward. Here is the link. The logic is simple - it helps companies to utilize their fixed assets better by segregating and distributing its capacity better. Amazon has had a great reputation as far as innovation is concerned. Jeff Bezos (amidst all the cynicism from industry pundits and investors) showed a great example of De-bundling by opening up its computing power and storage capacity to be used by other small businesses who cannot afford astronomical cost of monolithic assets. This is not the first time that Amazon faces flak about doing some thing different. Earlier when Amazon opened its 20 distribution centers and logistics services to other companies, investors were worried that the focus is shifting from the core business and then it was Kindle - the ebook reader from Amazon. In this post Seth Godin captures the cynicism about Kindle beautifully.

Like most computer networks, Amazon's uses as little as 10% of its capacity at any one time just to leave room for occasional spikes. Rest of the time this capacity is idle. It only makes sense that some thing should be done with these capacities. Look at it in a way that these excess capacities built in are just like waste until unless utilized. They are like the excess capacities built in the car. If some data is gathered about capacity utilization of personal cars, it would show almost the same numbers i.e around 10%. The rest of the time that capacity is going waste.

And why there will be customers for such service? Simply because the marginal cost of using such resources is less for them using this model. The customers will be able to get their websites online at much lesser cost and much more quickly. This service will in fact will fructify many more start-ups which can do which was not possible economically earlier. There are many examples, one of them being SmugMug Inc which plans to save $500,000 annually by using Amazon servers for storage.

Though to start with the revenues from this operation are small, this service is surely going to pay in the long run. Ya, I get this whole logic that computing and storage will become cheaper, but the trend might not continue as we move to quantum levels of miniaturization.

I like the statement by Jeff Bezos - "We are willing to go down a bunch of dark passageways and occasionally we will find some thing that really works". And as the recent results amidst all the recessions fear show, it does work out for Amazon. It has come out with impressive results crushing street expectations. Here is the link. Well these results might not be related to this particular practice by Amazon, surely it does reflect previous innovations which are paying off right now..

I hope Amazon keeps innovating and surprising all of us and changing paradigms time and again.It has done it with online retail, with Kindle and now with De-bundling. Amazon has faced lots of controversies and have proved all cynics wrong in the past and recently so with Kindle. Which brings us to another important point :-

Some times the market may not see the value of the change you want to bring in the system. I had a dialogue with Seth Godin himself (over email of course) and this is what he said:

"yes, that's exactly it
great marketers persist or work with their story and their market and get through to them eventually.
Take a look at "Crossing the Chasm" a great book on the topic..."

Life at SIBM

11th June 2007 – I was sitting in auditorium for the Induction Program, wondering how the next two years will unfold. All the brilliant people around me were making me nervous. People were already talking about specializations, job profiles and various other frightening things. I felt so under prepared. I was not really sure as to how I will be able to utilize these two years to add value to my career (pardon the MBA jargon). Before joining the college I was working, hence the usual laid back proclivity had crept over these two years of work. So I was not all enthusiastic and oozing with passion for the cut throat MBA studies which suck off every juice of your joyful life. I must confess I was bit scared after seeing the extra-ordinary enthusiasm of my batch mates and was wondering whether I will be able to make a mark? (I am still wondering about that)
As luck would have it, all those thoughts were washed away the very next week when the actual classes started. First week was kind of cool with normal introductions and interactions, getting to know people and faculty. I knew these were the happy times before the turbulent storm. Fortunately or unfortunately you don’t get time to think in here. You just keep churning out reports and presentations without delving into your own life. It’s like you are a machine or something. Well I have my own qualms about the way an MBA college functions but let’s leave it for a later day.
A usual day for me starts at 8:00 am when I need to get up, take the usual dose of ET and TOI and then make haste for the college after getting ready. Just manage to get my attendance for the first lecture. (By the way attendance is a big deal here in SIBM. If you don’t have 90% attendance for whatever reasons you are not allowed to sit in exams.)
To quote a friend here “Breakfast and sleep are luxury in SIBM”. Breakfast because people like me don’t get up early and sleep because we always fall short of time. Whatever be the situation, however less the load be, you will not get time. There will always, always be something to do which u had left earlier.
After every lecture we have a break of ten minutes in which you have time to probably grab a bite or re-look what is on the “To-do list”. I use Outlook for that but as the “To-do list” keeps on increasing with each passing day like the queue at a counter where there is no one to service. Sometimes it seems like you are fighting a lost battle against time. But heroically in the end, everything falls in place.

After four hours of this ordeal, we have an hour of lunch break in which guys like me rush to the canteen because by this time our belly is screaming at the top its voice to refuel it. After the lunch break, students catch up with the lost sleep previous night though lectures continue. It feels like you are in some spell and just can’t keep yourself from giving in.
Lectures get over at 5 pm on a normal day. On a bad day though, you never know when you will be free because anytime the uninvited mail from coordinator will come about extra class so much so that you don’t have time to have snacks. Now is when the day starts for you. You hit the canteen for some snacks and coke. Call up members of different team members to co-ordinate the assignments. Generally one stays in the college till 9 or 10 doing assignment supposedly as a team. Then have dinner and come back to hostel. After the usual discussion on day’s proceedings and mimicry of all faculties, every one retires to one’s laptop and tries to complete the pending work but the enticement of Movies, Friends, Prison Break and Lost is hard to resist. Sleep takes over by 2-3 am and then the same cycle follows the next day. Though the subjects will keep changing and so will the semesters but I guess this kind of routine will follow me for the next one and the half year. Just hoping that after going through this entire ordeal, it will be worth it. The money and time invested for these two years is an investment and after all the knowledge of NPV and IRR I just hope NPV for this project is comes out to be highly positive.