Saturday, April 21, 2018

Is acquisition of tech startups beneficial for large companies ?

I was reading through this latest article in Harvard Business review of April '18 on how innovation really works in organisations.  I found it quite interesting and it shook away away some of my earlier perceptions on why organisations acquire small organisations to benefit on research and development efforts.

We all have been led to believe that it is better for large companies to acquire young and small new tech startups than invest in Research and Development (R&D) independently. A glaring example of this is Google. Starting as a search engine, Alphabet, Google's parent company has now grown inorganically to include almost 215 acquisitions as of March 2018.

But does this hold good in general in the technology ecosystem ? It is a major question we need to understand.

Why are large companies afraid to invest in R & D, and why do large companies acquire small companies ?
First and foremost, it is the commercial interest. To join hands together and use the synergies of both the companies to become a large entity and grow in business volumes.

Secondly, when a hostile takeover happens, the intention of the large company is to finish off the acquired company, otherwise called predatory acquisition. 

A third reason why a major group acquires other companies is to get rights over the Intellectual Property the small acquired company may hold. Google acquired Motorola Mobility on 15 August 2011 for $12.5 billion and got rights to almost 20,000 patents which Motorola had. This helped Google be the undisputed leader of the mobile industry world over, challenging Samsung. Later on in March of 2014, Google sold off Motorola to Lenovo for $2.91 billion, less the IP.
A fourth reason of acquisitions is to have a thriving research and development ecosystem, and not to kill it, as Google did with Motorola. The parent company would want research and development to be taken up by the acquired entity leaving the acquirer free to use its IP
The fifth reason is that star employees of the large company investing in research and development are more likely to leave the large company and set up their own companies. This hurts the interests of the large company forcing I to go slow on research.
Because of these reasons, large organisations would want instead to take over small high-tech research oriented companies, in the process save time, money, effort and importantly star employees.

But contrary to expectations, it has been now shown through research that acquisitions of small tech companies by large companies need not necessarily improve the Research Quotient, on the other hand, it can kill the research benefits. 

Over a three year study conducted in the US on the acquisition intensity (ie. dollars spent on the acquisitions divided by the acquirer's revenues) is said to correspond with a significant decrease of the acquiring company's Research Quotient (a measure of the return on research and development investments). It is really interesting to understand how this has been found to apply in general to the industry, but has escaped Google, the biggest acquirer in the past twenty years on planet earth. 

     ie. the acquisition intensity is found to be inversely proportional to the research quotient.

It is found that of all startup innovations only 25% came from research by startups, 52 % came from experience of the promoters in an earlier industry and 14% came from suppliers to the industry.

It is also found that
  • the average rate of new firm creation in any industry is just 0.06% 
  • employees leaving their companies to start new startups is just one percent. There is a growing tendency among educated employees to stay back with major companies and hesitate to take the huge risks associated with starting new organisations. 
  • as tenure of employees in an organisation increases, the tendency to stay back with the same company is high
  • as employees are treated well, their tendency to stay back is high
  • as employees are paid well, they tend to stay back (till about $5.2 million annual compensation)
It is found that companies with 500 plus employees do 5.75 times more research than small companies and they are 13% more productive in research and development than small companies. This brings us to the stark reality that big companies are the real harbingers of development through research than small companies.

Large companies cannot acquire good companies that do good research and development and expect the trend to continue, instead, it kills the small company's research and development efforts too. Innovations often credited to small companies actually did originate from ideas which originated in the large companies when the innovator was working with them and preferred to quit and develop independently, as he found the environment in large organisation a bit stifling. Mostly these ideas were what the large company over time found impractical and unworthy to carry forward.

The takeaway thus is, let us not discount large organisations as still the furnaces of great ideas that is transforming the world.  The contribution of research and development that originates in large organisation is really driving the world forward.

george

Thursday, April 19, 2018

iD Fresh, the $100 million idli batter company from Bangalore ..

PC Mustafa is an ordinary village boy from Chennalodu village in Wayanad, Kerala, India. But he had a definite aim in life, to achieve something great. In spite of mediocre studies in school and excellent support from some of his school teachers, he has risen spectacularly in the last ten years. Mustafa with his cousins started iD Fresh, the idli/dosa batter company in 2005 in Bangalore India.

Indians around the world have a great appetitie for South India breakfast dishes of Idli, dosa and vada. Nobody ever thought the idli, dosa, vada batter which needs careful fermenting for over 8 hours, could be brought in neat refrigerated form to the customer in such an impeccable manner, neatly packed, with no preservatives and other added ingredients. It tastes exactly like what our grandmother or mother made at home.  The company is poised for great growth. Click here for the website .. www.idfreshfood.com

Techies call it the 3D printing of Vada;
The world calls it innovation;
We call it common sense !! -            Mustafa at Harvard Kennedy School, Boston, US ..

To get to study at Harvard University is a great accomplishment for any person in this world, especially when he is from outside US. To get an opportunity to talk to the student community at Harvard University, trying to narrate the life stories and lessons from starting an idli/dosa batter company is still a great accomplishment. And that is what Mustafa from Wayanad, Kerala, really accomplished in his life at such an early age. What more is to follow !! Click  here for a 2018 video of his talk at the Harvard Kennedy School, Boston, US..

After completing his B.Tech in Computer Science from NIT, Calicut and business studies from IIM Bangalore and working in a couple of hi-tech companies around the world, Mustafa started with his cousins, the idli batter preparation company in Bangalore called iD Fresh.

This MNC is now valued at $100 million (as of 2018) after Azim Premji's Premjiinvest invested in a 25% stock valued at Rs 150 crores. The sales turnover is expected to touch INR 150 crores..The company is poised for great growth and expansion in the gulf, it already has offices in UAE, and Europe and US which has a very strong Indian population.

The three takeaways from Mustafa's success story as told at Harvard were

1. Disruptive innovation of developing a vada dispenser. Crispy vadas were a speciality of South Indian grandmothers. That traditional role has been done away with the automatic vada dispenser, which helps even novices to prepare great vadas
2. Not ready to compromise on values - serve the Indian household loyally than the corporate customers, even if it means less turnover and longer time to breakeven ..
3. Trust the customer first completely without any questioning to earn his trust in return. A great learning in marketing too.
After personally experiencing and tasting iD Fresh dosas, I can vouch for it, nothing but top class. 100%. My wife whom I consider to be a great cook and hailing from Kottayam, the culinary capital of Kerala, gave full credit to iD Fresh for making such crispy, properly weavened, zero-additives dosa batter. The dosas were really crispy and healthy too ..

iD Fresh van distributing the stock of items in
Koramangala area, Bangalore
The idli / dosa batter is a mix of ground rice and udid dal. Rice and udid dal, left overnight for fermenting results in high protein content. (the iD fresh dosa batter which we get comes after the initial fermentation and hence can be used straightaway for cooking). By the fermentation process, (click here for health benefits of fermentation)  the dosa/idli batter when taken the next day morning is highly beneficial for human health.

Scaling up the production of these 100% healthy breakfast food items could be a major challenge for iD Fresh. With new production facilities in the Gulf, Europe and US, combined with the professional managerial and technical expertise, we can expect iD Fresh to have a global reach and reach the breakfast table of people across the world. 

Thanks to weekendleader.com, I use this caselet from their website (Click here for the original article) to discuss the iD Fresh case with my students at Alliance Business School, Bangalore.

George

PS : My interests in this company is limited to the personal experiences I had with the dosa/vada dishes made by iD Fresh before I discussed it as a case in the Alliance University class in Bangalore.

Looking forward to getting Mustafa to talk to our students soon.

Global IoT market and competing standards .

The global IoT market, as per a McKinsey report, quoted by Washington Post in 2016 says that by 2025 AD, just seven years from now, will have an annual impact of $ 11 trillion, ie. $ 11,000,000 million, (INR 715 lakh crores or INR 715,000,000,000,000) .., almost 10% of global GDP.

IoT is the most happening thing, as it moves from sensor based smart city planning (Singapore city project being implemented by Tech Mahindra), sensor based condition monitoring of infrastructure to healthcare to drought prediction and management etc, the scope is endless and vast .. 

The status of the global IoT h/w and s/w competing standards and it's impact on India is an interesting field to watch. Samsung is trying to dominate some sectors while Siemens and GE would definitely be interested in a share of the pie..

Open Connectivity Foundation (OCF) (click here)

The Open Connectivity Foundation (OCF) is touted as an open IoT standards group to unify standards, expedite innovation, and “create IoT solutions and devices that work seamlessly together,” according to a press release. Founding members include Microsoft, Cisco, Electrolux, General Electric, Intel, Qualcomm, Samsung, ARRIS, and CableLabs, who will work together to create specifications and protocols to ensure devices from a myriad of manufacturers work in harmony.

Click here for IoT  standards and Protocols www.postscapes.com

Monday, April 16, 2018

Checklists - importance and benefits ..

Checklists is an important quality tool ..
Atul Gawande, the celebrated author and New York Times bestseller in his book, the Checklist manifesto, talks of how the simple checklist can be a huge life saver or money saver in large building construction and so on. Even ISRO goes through a minute and detailed check list before they plan the building and launching of space vehicles, each time over and over again. They cannot afford to go wrong in any of the steps and have to be more than 100% confident that their processes are the best and will not fail.

We use checklists in almost all facets of human activity in our personal life, right from planning for a journey or picnic to planning for a marriage or higher education etc. We use it quite extensively in Industry to enable efficient co-ordination of activities and events in transportation, production, maintenance activities without missing out any of the important points or steps, either through forgetfulness of over-familiarity.

When we do not carry out the tasks as given in the Standard Operating Procedure or as per rules and procedures, we are bound to commit errors leading to major catastrophic or damaging events that can bring untold damage and costs.A checklist thus ensures that we go according to the Standard Operating Procedure, especially for a repetitive procedure.

The basic premise of using a checklist is to improve the quality of the product or service being offered to the end user or customer.

A checklist is a type of job aid used to reduce failure by compensating for potential limits of
  • human memory and
  • attention.
Even expert in an area may miss to follow SOP or certain steps which could lead to poor quality or product or service delivery. It is human nature and tendency. In these days of specialization and super-specialization, it is difficult even for the super-specialists to remember each and every action.

We see that the check list helps to
  •  ensure consistency and
  •  completeness in carrying out a task.
A basic example is the "to do list." A more advanced checklist would be a schedule, which lays out tasks to be done according to time of day or other factors.

A check list can be used to plan for the activities in a day.  It can be used in project management to ensure that critical tasks are not missed and it helps to give a time dimension to activities completed.

In the most simplest form it is a piece of paper with activities to be completed listed (not necessarily in order of priority) and ticked out as and when the activities are completed. A primary task in checklist is documentation of the task and auditing against the documentation. Some examples are listed here.
  • Pre-flight checklists aid in aviation safety to ensure that critical items are not overlooked
  • Used in quality assurance of software engineering, to check process compliance, code standardization and error prevention, and others.
  • Often used in industry in operations and maintenance procedures
  • Can aid in mitigating claims of negligence in public liability claims by providing evidence of a risk management system being in place
  • Used by some investors as a critical part of their investment process to help decide which portfolio to invest or not
  • The creation of emergency survival kits, for trekking and high altitude climbing
  • Professional diving, preparation of equipment for a dive  (courtesy wikipedia.org)
In the area of academics, it's use cannot be overstressed as it gives the faculty member an idea of the overall picture during the teaching term. (Click here for a check list at the beginning of an academic term).  In Alliance University, Bangalore, India, some of the faculty do use it to improve the service delivery process and it has been yielding great results.

Your comments would be highly appreciated in the comments column.

George..

Wednesday, April 11, 2018

Cancer incidence across countries ...

Rank Country Age-standardised rate per 100,000 (world)

1 Denmark 338.1
2 France (metropolitan) 324.6
3 Australia 323.0
4 Belgium 321.1
5 Norway 318.3

6 US 318.0
7 Ireland 307.9
8 South Korea 307.8
9 The Netherlands 304.8
10 New Caledonia 297.9

11 Slovenia 296.3
12 Canada 295.7
13 New Zealand 295.0
14 Czech Republic 293.8
15 Switzerland 287.0

16 Hungary 285.4
17 Iceland 284.3
18 Germany 283.8
19 Israel 283.2
20 Luxembourg 280.3

21 Italy 278.6
22 Slovakia 276.9
23 UK 272.9
24 Sweden 270.0
25 Serbia 269.7

26 Croatia 266.9
27 Barbados 263.1
28 Armenia 257.0
29 Finland 256.8
30 French Polynesia 255.0

31 Austria 254.1
32 Lithuania 251.9
33 Uruguay 251.0
34 Spain 249.0
35 Latvia 246.8

36 Portugal 246.2
37 France, Martinique 245.0
38 Malta 242.9
39 Estonia 242.8
40 Macedonia 239.3

41 Montenegro 238.3
42 Kazakhstan 236.5
43 Bulgaria 234.8
44 Poland 229.6
45 Romania 224.2

46 Belarus 218.7
47 Cuba 218.0
48 Japan 217.1
49 Argentina 216.7
50 Puerto Rico 211.1

Source www.wcrf.org, 2015 data ..

Monday, April 09, 2018

Digital Transformation in business..

Digital transformation is happening in almost everything and anything we do today.Disruptive technologies are all around us. If we are to survive in a very disruptive world, we need to understand
  • what are the features of the disruptive technologies that are affecting our daily lives, 
  • in what ways are they affecting us, 
  • what are the common features of the disruptions, if any and 
  • how can we manage through these disruptions with minimum of change.

How did we do train booking some years back ? I remember standing in the queue at Madras Central station to book a train ticket for the next day to Bangalore and get a ticket with details written in ink with pen about the bogie and the seat no. It was a pain then, I had sometmes to stand for more than 3 - 4 hours to just book a ticket.

Contrast it with what is happening today. I open the irctc.co.in website, give my credentials to log into my account, give my origin and destination stations, with date of travel and class, and lo, the list of 10-15 trains do appear on my screen, right from early morning to late night, with travel time, route, stops, fares and so on. In the comfort of my office or home, i can decide which one to accept and make the payment, again digitally by a credit or debit card and get confirmation by email of my ticket. I never have gone to railway station to book a ticket, even if I am at one of the railway stations, I prefer to do an online booking than stand in queue and do the booking. 

This is a good example of how train ticket reservation has completely transformed from a physical process to a completely digital process, where I do all the actions digitally.

Similarly air travel is one of the areas where all transactions take place digitally, even if i want I cannot get a physical ticket on any route these days.

Some of the other actions I do using digital transactions are

1. topping up our mobile phone
2. logging into our bank website securely and transfer money within accounts or across banks using NEFT transactions.
3. make Direct-To-Home (DTH) TV payments
4. make credit card payments
5. to make a presentation for the class the next day, I just loginto my Google cloud and open the presentation package and prepare the new presentation file using native Google software. (gone are the days of Microsoft and ppts and so on..)
6. If I have to send a notification to the class, earlier we used to put it on the college notice board for all to see. now we just type it to our whatsapp account to the whole class or the class representative and within seconds, it reaches everybody. If we need a permanent record, we type it on the google drive and share the link through Whatsaopp.
7. Car booking through Ola or Uber is done entirel;y hrough the web app over the Internet.
8. Purchase of electronic items, expensive electronic gadgetry at an attractive price, we make the purchase over the net and make the payment online through debit or credit cards, which will be delivered in a day or two.
9. I have an active PayTM and Jiopay online wallet to make payments at Zoomcar or Jio subscriptions
10. Movie going also has become digital as I visit Bookmy show and make my bookings online and just visit the theatre at the required time to watch the movie.
11. Ten years back, I started offering supplements to my classroom teaching through a digital platform called MOODLE (Modular Object oriented dynamic learning environment). This e-learning software is the backbone of my effective classroom delivery helping me in offering quizzes and online assignment submissions too.

The purpose of my listing my digital rendezvous is to make everyone realise , willingly or unwillingly we are all on the digital bandwagon. The earlier we realise this truth and change our actions, interactions and thinking, better for us. Else we will find the going tough and cumbersome.

What are the societal pressures which warrant digital transformation ?

1. a more enlightened approach to plan our working life has made us to think
  • how to do more things in a short time,
  • how to expend least effort
  • doing things easily resulting in
  • least disruptions to existing systems.
2. technological developments
3. highly innovative mindset
4. pressure to effectively use scarce resources to our best advantage
5. how to feed more people and
6. how to sustain our natural resources 

What are the skills needed to effect this digital transformation ?

They are

1. Tech savy approach, to be able to understand the nuances of technology offerings and how to adapt it to modern and changing circumstances
2. an entreprenuerial spirit with readiness to to deliver top-value to the customer
3. an agile structure, ready to transform from a tall heirarchical structure to a flat fast decision making structure
4. collaborative processes to enable different departments and processes to collaborate and innovate by offering new ideas and
5. business acumen to see where maximum value can be delivered and how it can be delivered at the lowest cost

The final takeaway from effecting digital transformation in our life and businesses through either SMAC, ie. social, mobility, Analytics and Cloud to IBIBG (Immersive tech, Bigdata, Internet of Things, Blockchain and Genetic Engineering) is that all these actions open up new ways by which we can bring new innovations in our lives and the society around us, making our lives more enjoyable, healthy and lively.
George..

A season with Pandit Jawaharlal Nehru ..

This morning, I enjoyed a calm and quiet one and a half hours I spent with India's greatest Prime Minister and architect of Modern India, none other than Pandit Jawaharlal Nehru.  I did not get to see him and feel him physically, but he was with me in mind and spirit, explaining to me the intricacies of Indian culture and spirituality through his greatest book - The Discovery of India.

Of late I have started reading this classic book and the best one on Indian civilization. This classic on Indian history and philosophy spread over 4500 years covering the spiritual texts of Bhagavad Gita, Mahabharatha, the interesting commentary on the Jataka tales, Budhist influence and Alexander the Great's failed attemts to conquer India, from none other than this proud son of India makes excellent reading.

Was it a twisted fact of history that when Alexander the Great from Macedonia was mercilessly defeated by the smallest of chieftains when he tried to conquer the area around Indus, it was quoted (or misquoted in history books around the world) as an internal strife within his army which wanted to return to their homes (before all of them would have been butchered ..!!) ??  Giving Alexander of Macedonia the pride and greatness due to him, let us leave it to our analysis to understand the real intent of Alexander's withdrawal ..

We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open.
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open. Jawaharlal Nehru
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open. Jawaharlal Nehru
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open. Jawaharlal Nehru
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open. Jawaharlal Nehru
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures that we can have if only we seek them with our eyes open.
Read more at: https://www.brainyquote.com/quotes/jawaharlal_nehru_121014
Nehru is indeed one of the greatest Indian political leaders, statesman, thinker and philosopher of our time. His depth of understanding, ability to analyse, his understanding of events, philosophical discourses are beyond compare. Nobody in the twentieth century across the world could match the intellectual prowess, strength of character, discipline and capability of Nehru, to challenge him.

The most interesting part was that Discovery of India, was written during a four year period while Nehru was in solitary confinement at the Ahmednagar Fort from 1942-46. While Gandhiji was outside the prison organising struggles and strifes against the British, Nehru was sitting in the quietness of British imposed confinement and adding to the richness of Indian appreciation and understanding of its rich traditions and philosophy.

A must read for every lover of Indian culture, traditions, its rich and varied history, events and spirituality !!

Unfortunately Nehru is also badly a very misunderstood political leader as some sections of the political spectrum fail to appreciate his contribution to the birth and freedom of India from British clutches and as the architect of a Modern India. Quite sad !
Let us all understand that intelligence and understanding is beyond all narrow confines of ideology, thoughts and selfish actions ..
george..

Is acquisition of tech startups beneficial for large companies ?

I was reading through this latest article in  Harvard Business review of April '18 on how innovation really works in organisations.   I...

My popular posts over the last month ..