Category Archives: My MBA

Observations from my MBA!

Demystifying Strategy

In all my interactions with mangers, consultants and a whole lot of other folk in the field of business, I find a common problem: We love using big words. It appears as though each specialisation has made a gentleman’s club of sorts, to which you can gain entry only by using the right language. The problem with this is that it alienates what we do from each other, and doesn’t really help direct business collectively: simply because we don’t speak the same language. As service providers, it often makes it hard for clients to understand the value of what we do, particularly startups and non-profits who aren’t accustomed to corporate language.

One of the most loaded words I have heard repeatedly; and often needlessly, used is: “strategy” or “strategic”If we really break down “strategy” it is simply the shortest line between where we are and where we want to go. “Tactics”as we like to differentiate in jargon is what we should do to get there. 

A mentor of mine taught me well when he said: “There are only two kinds of strategy in the world: audit and directional” I’m going to use this idea to bring to light what “strategy” really is, which I hope unburdens the word:

1. Audit: Facts. Analysis. Information. Data. “What’s the situation?”, “What’s good, and bad?”, “Who’s strong, who’s weak?” The stuff we learn in B-School: SWOT, PESTLE, Porter’s Five Forces and all the other models: these are simply audit. These only tell you where you are today, and give you an indication of where you should be going. This is not difficult to do, and don’t really help any organisation figure out how to get anywhere. This is never enough, and therefore it is not strategic. The key to doing this right is to be relevant to decision making.

2. Directional: Insights. Recommendations. Decisions. Plans. “We need to gain new competencies if we want to achieve this end. Do we develop them, or acquire them?”, “We need a new product in our portfolio, priced at a point that makes our star product more appealing”, “We need to do something interesting, or risk being forgotten”. These give an indication of where we should be headed, and by nature give clarity to steps on what we should do.

One last thing. My mentor always followed his line with: “Don’t give me an audit. I want direction”.

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Where Is The Brand Value?

Throughout my MBA I always had one question in Finance and Accounting related classes: “Where is the brand value?” As someone who believes in the value of brand building, I was also asked the same question by my peers: “Where is the brand value? And if you can’t show it, why should we spend money on it?” Sadly, my rudimentary knowledge of Finance and Accounting did not come to the rescue. Today; I am glad to say, I have an answer:

The brand value is in there. Everywhere. And this fascinating answer comes from none other than Aswath Damodaran.

To help elaborate on (and to possibly help my peers in the branding business justify themselves) where exactly the brand value is reflected in the income statement, I’ve made my own simple version of an income statement.  These include some notes of where the value of a powerful brand is reflected in your (or, our clients’) income statement:
Where Is The Brand Value?

My plea to those in the business of brand building: Understand this, as it helps us help our clients. My plea to those in management: Understand this, as it helps you make more informed decisions.

So, having understood this, I have one question for all non-believers: Now, is brand building an expense, or an investment?

The Illusion of Busyness

I believe there are several peculiarities in human behaviour that percolate into management. Besides irrationality, I’ve also been curious about the illusion of busyness. This idea has been discussed several times, often as a plague of modern work culture. This article from Slate suggests that “Busyness is a virtue, so people are terrified of hearing they may have empty time. It’s like being told that you’re obsolete.”

This behaviour is also reflected in managers who are constantly doing things for their company, brand or project. The flaw of this habit is simple: you’ll only get to the wrong place faster, by going wholeheartedly into something that could be wrong.

Annual plans, quarterly plans and company strategy are perhaps made with this in mind: to take a step back and have a long term view on any project but I find that with time, these too become mere operational necessities and one among many things that need to get done.

The trick is to slow down. A clarity on long term future (and more importantly the ability to get there) only needs the answer to two basic thoughts:

1. Who we are: This seemingly simple question is one to easily get wrong, while a lot of companies wrongly define the business they are actually in; a lot of mismanagement ensues. The key rests in identifying the value any pursuit creates, rather than the output it creates. Innocent smoothies are a case in point.

Innocent-About

2. Where we want to go: Very often wrongly defined as the financial motive of a company, there has to be more to this. It is a vision that doesn’t just align what we want to achieve financially, but also intangibly. It is a definition of our legacy, not our success. Nike gets it right!

Nike Mission

How we get there (or strategy as the presentations would say) is simply the shortest line between these two points.

Irrationality in management

There is a fundamental flaw with how we; as humans, behave: We think our rules don’t apply to ourselves. We think we are above the peculiarities that explain those around us, and somehow we are a unique snowflake and these don’t apply to us. I also noticed this idea in Dan Ariely’s ‘Predictably Irrational’ when he wrote (not quoting) that readers of his books must be aware of their own irrationalities, rather than just identifying irrationalities in others.

This issue is significantly compounded in management and marketing. A case in point: A fellow MBA classmate of mine was adamant that consumers of Louis Vuitton bought the brand for its quality and craftsmanship. She forgot to admit, that she was an LV loyalist herself. Would she then base her management decisions (if she were an LV brand manager, perhaps) on her own justifications?

Marketers and managers, those current and aspiring, I have found are guilty of this consistently. Though they cannot be singled out (as we all are guilty of this) this peculiarity greatly affects the decisions that managers and marketers take. I have seen marketers apply all sorts of irrationality in their own buying decisions, but when they talk about “their consumers”, they believe that they make rational choices.

I believe that there is a simple way to fixing this: Understand that you are a consumer too. When you remove yourself from “consumers”, you tend to view them through a different lens. But when you accept that you too are a consumer, and make your own irrational decisions and post-rationalised justifications, you can truly identify your own buying behaviour and not have your understanding of your consumers clouded by this perception.