Common sense is so uncommon!

This is true in today’s business world. I recollect the case of the illustrious Lehman brothers which went belly-up in 2008. It is a case of high greed and ignoring basic financial and common sense. The high leveraging (23 times) done by Lehman brothers was the contributing factor to its demise. They bought risky mortgages, CDO (collateralized debt obligations), invested heavily in derivates with the idea that the housing prices will go up forever. We know the rest of the story. Of course, the image of the reputed alumnus from Harvard, Kellog, Stanford, and the likes of the world took some beating after the debacle. Straight thinking and common sense are so crucial in business management. Of course this is not to belittle the business education. Jack Welch, Bill Gates, Lakshmi Mittal had excellent business acumen and understanding of the ground realities. The need is the ability to judge the feasibility of an idea with clinical precision.

Abnormal situation management

Abnormal situation management is about how robust is the organization. To what extent it can continue working before it shutdowns, is there a graceful degradation before the final collapse, etc. Organizations need to have a good mechanism and process to detect the deviations from the normal having automatic control. Having simulations and predictive models in place to help identify and give an early warning of the possible forthcoming abnormal situation is extremely important.
The best in class organizations have the abnormal situation so well controlled that there is almost zero impact on the overall system. The cost and complexity of building such systems are high. However, the cost of building early detecting and possible self healing systems is worth that one critical moment of disaster.

Management in difficult times

Anybody can lead the organization in good times. The real test is to manage to keep the company afloat during difficult times, when moods all around are gloomy, politics within the company at its peak, everyone is thinking as individual and less as team. In this situation we may take some clues from what the insurance companies taught us. For our life we take some kind of insurance this can be applied very much for business as well. Now you must be wondering why I am comparing life with business, the reason is in both cases bad time is unpredictable but it is most likely that it will come some day. What would be the insurance analogy for business? What plan and period depends on your business management acumen.

How to create value for your customer

The aim of every top management of business is to create value for the customer. The question is what is the best method to create that value? Top management should always encourage its employees to adopt new methods and procedure to increase the efficiency of the organization. If organizations can bring changes than it is more likely to add value internally which would then reflect into producing better services and products. The benefits of which will go to the end customer. Change and innovation are the catalyst in generating more value to the customer.

Managing system complexity

The complexity of business system is increasing rapidly. We can assume Moore’s law which has been used in the semiconductor industry for managing business systems as well. This assumes that the business system will be impacted every 18 to 24 months. The complexity is driven from the outside rather than something done internally. Unfortunately managers don’t seem to look at this way, they believe that they lead the complexity and it is an internal function.

Is family –owned business model sustainable?

Many companies in the past have done well because of great visionary capabilities of the founders. Some of the founders are very hands-on (technical) and many others had the urge and drive to become entrepreneurs. So, it maybe difficult to say that one needs to be hands-on to be a successful entrepreneur. Maybe it helps, but at times it may work negatively (we have many cases of this).
A few things that emerge clearly from successful founder are some of the key traits- 1. Very hardworking. 2. Very passionate, 3. Concern for people and surroundings, 4. Purpose and goal of life is clearly beyond self, it would encompass- country, region, community, etc. 5. Driven by merit, 6. Straightforward, 7. Quick to learn, 8. Deep understanding of the business. 9. Focus on the content and process, 10. Taking risk, (for many of these people the word risk doesn’t exist).
The business model will survive if the successor has these traits. Specifically for family-owned business model, genetically it should help to have some of these traits in the family in various degrees. So one could assume half the problems solved for family-owned business model, but solving half the problem or even 90% of the problem when you are at the helm of affairs is not good enough in today’s business world.

Implementing service oriented architecture

There is a cost and time impact in implementing SOA. Hence, starting with a small project that addresses a particular business problem can help to get the decision-makers on board, although it is important to keep in mind the ultimate goal and have a plan as to how to evolve to SOA over the long-term (five years).
Becoming a process-centric organization is crucial. It is clear that business processes matter, and that organizations want to be capable of quickly modifying a process when necessary, so the existence of a business process layer that drives changes in services as the organization adapts is vital. This means that services must be able to address specific business problems by drawing together the business logic and data sources from multiple underlying systems.
Modeling the enterprise offers a useful framework for documenting the organization, providing the essential blueprints for the communication, interpretation, and implementation of value drivers throughout the organization, whilst enabling the evolution to a service-centric IT environment. The use of industry and reference models can provide a useful starting point for a top-down approach.