The Limits of Success - what internet companies can teach us

As we go about experiencing and studying the business model of internet companies, there is a fundamental big lesson to be learnt about managing businesses - the limits of success.

Every business, new or old, successful or not, has to undertake strategic planning for its future. It can be an informal approach (as it is with most SMEs and FMBs) or it can be a formal HQ directed approach (as with most MNCs). Whatever the model be, there was a time when strategic planning meant creating a vision for the next several decades. Then it got reduced to perhaps around 10 years, and then 5, and then not more than the present fiscal. I doubt if strategic planning today can be done with any amount of confidence even for the next 6 months.

This is especially true for internet companies. By the term "internet companies" I refer to those firms whose main business is to provide a certain platform/service to users on the internet. This platform/service can be social media (Facebook), search engine (Google), online auctions (eBay), cloud services (Microsoft) or retail store (Amazon).


What do we mean by "the limits of success?"

Going beyond strategic management, the internet companies are a great way of learning crucial lessons about the most pressing question in business management - the limits of success. Four questions define this:

1. How much can a company succeed in its business?
2. For how long can a company succeed in the same business?
3. How profitably can a company keep on, in the same business?
4. Is success permanent?

These questions almost seem encroaching in the domains of philosophy and futurology, but they remain the core questions that every manager worth his/her salt has to confront some or the other time. As I said earlier, studying the internet firms is a fantastic and enriching way of understanding the answers to these questions regarding the limits of success.


Let me illustrate my thought with some detailed examples :

The engine and the windows

• Browsers I remember way back in 1993, there was a time when the email was just beginning to make its presence felt. As the email spread around the corporate world as the most fancy thing to have, the path was set for the development of the first business model of dominating the internet - the browser. Netscape Navigator (NN) was the first classy internet browser that came along. Created by the famous Mark Andreessen, it soon became the dominating force for desktop internet search. However, this lasted only for a couple of years when Microsoft made a u-turn on its stand on the internet, and decided to come full force and destroy the NN. In classic Bill Gatesian style, Microsoft bundled a free Internet Explorer browser with its dominating operating system the Windows, and naturally, as always, it killed the NN in a short span of just 2 years. NN could do nothing and watched in horror as it almost vanished from the market. It still exists, but the glory days are over. As a dedicated user of the NN, it was quite shocking for me to see its sudden demise, and the inexorable rise of the IE browser. This - amongst other things - culminated in a legendary battle between Microsoft and the US Justice Dept, which again Microsoft won, and saved itself from being cut up in parts to avoid its monopolistic abuse of power.

ICH - an enduring brand

I wrote this awash in nostalgia. It might as well be written by a student of the discipline of marketing, and for all I know the story carries so much gravity it could easily turn into a case-study one day. I hope it does! I like it when Indian stories take that route.

For almost all of us, some of the enduring memories of childhood relate to the time we spent with our loved ones while eating out. Those memories, vivid in detail, flash through the mind several times in later parts of our lives. These are pleasant memories, happy moments that stay with us forever.

It is rare for service providers and manufacturers to last beyond a certain age. Usually companies come and go. That's the rule. Very few stay. Either the concept gets worn out, or the promoters may lose interest for a variety of reasons.

Especially so for (retail) food companies that don't indulge in aggressive marketing. If they survive as a brand for decades, it means three things for sure

1. the quality of food is excellent
2. the loyalty of customers is pretty high
3. pricing of certain critical items is strategically done

India has its share of successful food brands. Amul is the foremost and the poster-perfect example of one such success-story. What makes Amul special is that it's not some high-sounding corporate that created it, but a cooperative federation. It's a sterling example of a truly unique experiment that was managed to near perfection. Not just the philosophy behind it, but also the commercial side was taken care of very nicely.

One more brand that has stood the test of time is the Indian Coffee House, or ICH. The name is a misnomer as they serve a full range of meals and food-items. And very tasty & healthy stuff really!

The Indian Coffee House is run by a series of worker co-operative societies. It has a strong presence with hundreds of restaurants across India, but largely in South India. I really like the idea as it is a commercially successful venture run by worker co-operative societies. This is as close as you can get to a healthy blend of socialism and capitalism.

The Indian Microfinance saga

Over the past few weeks, I have watched in consternation as the malice and hatred inside and towards the MFI industry has spilled onto the streets, and in the media, and the paragons of virtue (the promoters of MFIs) have perceptibly fallen from grace. The drama has all the ingredients that a Bollywood blockbuster requires - the poor looking for messiahs, greedy MFI promoters, husband-wife battles, politicians hungry for power, red-tape and bureaucrats, billion dollar IPO valuations, the inevitable suicides, and the clamping down. From the glowing and rich praises heaped upon the work of Nobel laureate Md Yunus of Bangladesh, to a typical corporate-political potboiler is quite a distance travelled by the MFI industry, in South Asia.

For any entrepreneur, management student, or a policy-maker, the MFI saga presents an excellent ground for learning.

Before I get into the nitty-gritty of this story, let's run through the basics.

What is the concept of "microfinance"?

When you lend money to tiny businesses, you are doing 'microfinancing' of those tiny enterprises. A tiny enterprise could be as small as just one individual.

What are MFIs?

Imagine the scenario in small villages and towns, when people who have very little steady streams of income want to grow and meet their financial obligations and chase their dreams.. and no established source of credit comes to their rescue. Big banks surely do not. Governments are - generally speaking - tardy enough not to be very effective. So who helps these guys, if at all? It's the Microfinance Institutions (MFIs). These companies (or institutions) extend "loans" to these small guys. So naturally, it all sounds good. The small guy needs small sums, the MFI hands it over to them, and everyone is happy. So, microcredit is given to many borrowers by microfinance institutions (MFIs).

Microfinance firms typically give loans to small businesses that have no access to banks and charge an effective rate of 28-32 per cent a year, about double the rate on bank loans.

Civic sense in India - Indians speak out!

Recently, I started a discussion with my social media friends on this topic - "Indians lack civic sense - basic manners in public places that keep civility alive. Suggest one thing you wish to change in Indians' habits, that would improve civic sense and civility."

The list of answers I received reflected pain, hope and frustration in almost equal measure. Here I present the entire range of opinions expressed  by various individuals. It makes a fantastic read.

Indians lack civic sense - basic manners in public places that keep civility alive. Suggest one thing you wish to change in Indians' habits, that would improve civic sense and civility.

Rohit Vyas VALUE BASED EDUCATION

Shoaib Ahmed If everybody loses "I am the king, no one messes with me or talks in even a lil higher voice with me" then India or atleast Indore would be, atleast, a place to live in.

Nikita Phadke I think talking loudly on phone in places is a habit people should try to improve.

Navneet Bajaj Every Tom, dick & harry in India has some 'Neta' connection, which not only empowers them to keep their civic sense at home but also enables them to take law in their hand...

Rahul Sinha the correct word is nepotism :)
Menal Lunawat The mentality of the people and would like to widen their thinking...people want all the luxury but dont want to make any efforts from their side....like people love living in clean city but still will throw wrappers n stuff on road even when proper place to discard them is there...but people should understand that make some efforts because 'boond boond se gadh bharta hai'
Yuvraj Jaipal staring @ people..
Anurag Mangal As a resident of Delhi, I believe that people should get themselves more calm. Unnecessary aggression especially in north India is very high. Which reflects on traffic lights, que of metro, buses etc. Those who are not a part of this aggression while watching others violating their rights makes them also to be a part of this disease.

Giriraj Singh Chundawat recently some official (i dont know name) claimed that we Indians have inferior cleanliness sense than west. I felt bad but somewhere inside i thought that actually he is partially correct too. The way we spit on roads, throw garbage wherever we wish, etc shows how much we care for our prestige. We sincerely praise the clean foreign roads (yar UK ki roads to kaach jaisi hoti h!) and then turn away in disgust our face when it comes to clean our own house. i wont suggest some law or something else to ban spitting etc bcoz thats very difficult to implement in the country of our proportions. But i think it can't be done unless we realise the moral responsibility of keeping our country clean. And we can do it. Why cant we keep our roads clean when we think twice before spoiling a five star hotels' floor? We are one of the oldest civilisations on earth. We have taught the world how to live. Cant we do it again??

No action replay, please.

The emptiness, fluffiness, unbelievable-ness and thoughtless-ness with which a movie can be made becomes visible to the audience. You cannot hide it. Even the lightest and most humorous of movies need solid gravity to succeed. They need at least one solid anchor to pull them off!

Unfortunately, if the quality of the movie "Action Replayy" is anything to go by, I would request the director Vipul Shah that "No action replay now, please!"

This movie has seriously dented the image (at least in my mind) of the much-applauded director. And in this fiasco of a wannabe blockbuster, the biggest losers are those who are actually not at fault - the actors. And the audience!

One enters the movie theatre with high expectations as the promos seen on TV are excellent, the cast is solid, and the director is a proven one. Yet, one of life's surprises is sprung when we find that even all these do not add up together the way they should.

A Sunday accident

This note was written on Sunday, 31-10-2010.

Had an interesting and sad experience today. While going out on a long drive with family (at 3 pm), I saw a motorcycle driver on Indore Bypass (near Truba college) lying on the road, bleeding profusely from the head. He had just met with an accident, and when we crossed by, I could see him trying to call for help (while lying on the street). People from nearby HP Petrol Pump and Dhaba had begin to gather around him.

I sensed that the accident must have happened barely 3 or 4 minutes ago. From the looks of it, the motorcycle was coming from the other side of the road (perpendicularly) and the car that hit it could not see it come, and hit it. That car had vanished by now, leaving just the fallen back bumper on the site. The victim was not wearing any helmet.

My family was in very good mood today. But this accident suddenly changed everything. Having seen that man bleeding & lying helpless on the highway, there was no way we were driving away heartlessly.

Usually, you do not see blood dripping like water from someone's head. Perhaps a whole lifetime will pass by and most of us will never witness such a sight. So when one is confronted with that unexpected situation, the mind finds it difficut to react immediately. I guess that's what happens in most accident cases with most onlookers.

Around 50 people had gathered by now. Dazed. Stunned. Silent.

I parked my car safely a little distance away from the site of the accident. My son got very scared, and asked me what we are going to do. I said "we are not driving away, that's for sure. But let's wait a minute before I get down and do something about this."

Kaun Banega Addicted

Watching Amitabh Bachchan's "Kaun Banega Croreparti" on television is a fantastic exercise in not just rewiring and acid-testing your grey cells, but understanding the cultural nuances of India as well! It's an addictive & well-lubricated series, and hence immensely enjoyable to be part of such an exercise.

How easy it seems!

Well, KBC is a general knowledge based quiz programme, intended to bring out the best in its participants, all of whom chase the seemingly not-too-far a target of Rs 5 crores. In just 12 seemingly simple steps, you can reach the pot of gold! But no one seems to reach there quite often. Come to think of it - in an informal sitting, if I make you an offer that in just 12 questions you can win Rs 5 crores, and you can use 4 helplines too in the process, you'll think I'm a lunatic (as you will be almost totally sure of winning). But then, on the sets of KBC, not many people actually reach there. Amazing, isn't it?

Amitabh's style has the following distinctly positive elements -

• Ultimate grace - you will never find Big B losing his calm and composure even under provocation. He remains cool, dignified, solid and friendly towards the participants, and the audience.
• Helpful hints - perhaps as a part of the programme designers' strategy, Amitabh gives several hints before 'locking' any answer. A smart contestant on the hotseat can easily pick the clues.
• Puts life even in repetition - the whole format is repetitive. After all, what's there in it? You get 10 people to do "fastest-fingers-first", then you get one of them onto the hot seat, then you throw 13 questions at him/her, then you award the money, and back to step 1. Even then, the whole process looks (feels) totally new everytime Amitabh reboots it. Credit goes to his personal charm, charisma and quality of communication.
• Sartorial treat - most of the times, the dress designers earn a 10/10 for Big B's fantastic suits and ties. Even the most boring (rare!) of episodes seem to scrape through due to this!

The programme has revelations for you, if you take some pain to delve deeper -

• A gold-medalist teacher who is on the hotseat, and unable to answer a question because he does not know the meaning of "vacuum" is a big red flag for Indian teaching system
• A computer engineer (B Tech, 24 yrs of age) who does not know what the "S" in the "SIM" card stands for, is another big red flag for the engineering education in India
• Many of the apparently easy questions are not easy at all! You realise that once your confident answer (delivered in front of your wife and kids) goes haywire. Ha ha!
• Even a very slow programme (the KBC is quite slow - just 10 to 20 questions per episode of 1 hour) can be made addictive for millions of viewers, for years on end

These are revelations! And KBC has such nuggets in abundance.

The more things change, the more they remain the same -

• The show's lead sponsors keep changing. But that does not at all affect the continuity of the show and the brand image "KBC". Logically, at times I think, it should.. as so much is at stake through the active involvement of the lead sponsor. But the KBC brand remains intact, irrespective of all this.
• Even the anchor changes, and the brand remains intact! Shah Rukh Khan led the show in its third version, and came out a winner. And today when Big B is back, KBC is as vibrant as ever. This is quite amazing. And it indicates that the underlying trust of millions of viewers is much stronger than anything else.
• KBC appeals to the most intellectual of viewers, as well as to those with no particular interest in the pursuit of knowledge. That's a significant achievement, especially in the Indian context. Perhaps that's why Bollywood was roped in to lead the show.
• I guess one of the unstated clinchers in the KBC drama (I use this word positively here) is the cultural exploration of the contestant's background, by Big B. The way questions are asked (and answers given) about the personal, social and cultural background of the hotseat'ed' is very revealing. And at times, it seems to overshadow the quiz itself! But no one minds.
• KBC holds lots of practical lessons for students of management - in marketing / advertising / branding, in operations / processes, and in strategy.

So on the whole, a wholesome treat to eyes, ears and the mind. KBC remains that lottery that can change your entire life, at least for some time!

Rock on, KBC!

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