Digitization is the future – John Chambers, Executive Chairman of Cisco.

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Digitization is the future - John Chambers.

It is so very easy to like John Chambers, Executive Chairman (and previously the high profile CEO) of Cisco. John still has the energy and of a 30 year old and the curiosity of a toddler. John addressed a couple hundred CEOs at the Alliance of CEO’s breakfast meeting last week and shared his vision of future of businesses. He passionately emphasized the role of digitization as a a key competitive strength and differentiator for companies of tomorrow. Here are the 5 key takeaways –

1. Companies should not continue to do things that they are good at, for too long. Transformation is key to continued existence.

2. Not all tech companies of today may live beyond 10 years unless they learn to consistently transform. Doing so earlier, not late is the key to competitiveness and existence.

3. Few forward looking countries are doing a great job at building a robust future for themselves using technology and digital innovation. He reiterated the role of country leaders in driving this and particularly referred to Indian Prime Minister Narendara Modi as a visionary leader in this regard. The Digital India campaign led by Modi is a huge game-changer of the coming decade and should be studied and emulated by countries and corporations alike. Way to go Shri. Narendra Modi!

4. Near death business experiences make you stronger. The experience of surviving through extreme turbulence and volatility must be cherished.

5. There is a direct correlation in doing good karma (aka CSR – corporate social responsibility) and company growth. So continue doing good things, you will benefit doubly. When in doubt – do what is right. Make sure you value your core principles and beliefs and retain them, they will always stand with you in good stead.

Thank you Paul Witkay for your generous invitation and a great session.

Sanjay Bonde – www.bonde-ventures.com


Market Research vs. Entrepreneurship in Silicon Valley

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Market Research vs. Entrepreneurship in Silicon Valley

Like it or not, there is something that folks in the Silicon valley really seem less interested in doing, more so than anywhere in the world – conducting market research. We all know how large enterprises either goof up conducting research or simply make it up themselves? They say, if you lie 100 times, you start to believe it. If you lie big, you may only need to do it 10 times. So do we really think research is a necessary evil or just plain evil?

Let’s take a closer look to evaluate:

  1. Most entrepreneurs look at things differently. They are able to spot an opportunity most people pass on without noticing the potential. A senior banker colleague of mine who funded high profile entrepreneurs once explained this to me very closely. “Look there and tell me what you see”, he asked as we walked through Marble Hill Park in Twickenham. I displayed my education by answering, “That’s a tree!”. He said, “Hmmm! It is an opportunity to start a park sweeping service. That’s how entrepreneurs think.” This lesson has stayed with me ever since. Most lenses are not calibrated in the realm of research and most people miss this.
  2. Organized research doesn’t always work. Large enterprises operate in mature businesses where the industry publishes nicely collaborated reports on market share and trends. Don’t we know that being big may not necessarily be beautiful? And that emerging trends are nowhere captured in this reporting process, especially when they are embryonic. The ones that are never captured are the ones that are changing the game altogether. I still marvel at how Bezos was able to create AWS despite the fact that VMware was the disrupter in the virtualization space. Anyone out there still buying servers and expecting a promotion?
  3. Use case for research. Banks and organized sector investors love research. They like to see risks reduced and profits maintained. I have come to think that the biggest use of research may have been driven by the banking system’s immense appetite for data gathering. Product and business lifecycles were long and this allowed research to persist and stay relevant for longer gestation. Businesses of today are better served spending time on innovating and creating a compelling value proposition rather than market research. Unless you are ignorant and too lazy to google – you will find research reviews everywhere, the best ones are written in plain English.
  4. Paid research isn’t always good. Too many research firms use raw talent with little field experience – or hunger to innovate – to create research reports. Maybe a better way to research would be to use hackathons and apply an ‘agile research’ process to get worthwhile observations fast. Being approximately correct is better than being precisely wrong! 
  5. Irrational passion for dispassionate rationality. Few people would dispute that rationality is firmly lodged at the core of the contemporary microeconomic theory. By rationality, economists generally accept that rational people are those who act purposefully. These ‘rational’ people are those who make decisions consciously with some sense of purpose or intent. This describes actions made with deliberate, conscious, and careful consideration of the relative value, or the costs and benefits, of alternative courses of action. Think – BIG ENTERPRISE. People who do not act with a preconceived purpose – that is – who behave as they do because they have no other options or because their actions are determined by external influences can be said to be ‘non-rational.’ Their actions are mere responses with no guiding evaluations of conditions or consequences – aka no market research. Think – INNOVATORS. Irrational people (third type) on the other hand are those whose actions that are contrary to welfare-enhancing cost–benefit calculations of people making considered judgments. I don’t think it will be wise to expend our time thinking about this category.

 

Silicon Valley is skewed towards the non-rational side of things and creating new realities where rationality could subsequently be applied. This is an adventure sport. There is no reason why there can’t be a sporty ‘Silicon Valley’ in your large organizations that balance the rational and the non-rational behavioral dimensions. And you can have fun too!


Will China embark on the innovation bandwagon?

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Silicon Valley | Chinese innovation | China economy | China

China is at the center of attention in the business community today as it needs to embrace change and invigorate its economy which is on a downward trend. Although the Chinese manufacturing sector clearly dominates the globe, many have questioned the Chinese ability to innovate – design, develop and commercialize new products or services. Many prominent researchers have tagged China as the “land of rule-bound rote learners”-rarely breakthrough R&D. They believe that the Chinese had more appetite of testing pre-existing products/service in the Asian markets rather than taking the risk and investing resources in developing and perfecting them.

While many had cast doubt over the Chinese innovative revolution, there are expectations now that the Chinese market would emulate Silicon Valley. Finally, the winds of change and innovation seem to be blowing in the right direction. Bonde Ventures recently received a business delegation from China that acknowledged China’s potential innovation breakthrough needs and going the Silicon Valley route. “We need better IP protection,” they exclaimed. Unbelievable! The following four vital tectonic shifts are the key drivers of this change:

  1. From “planned” economy to a “market” economy. Since China’s market economy is still relatively young, it may take another decade or two to complete this shift. By then, more economic freedom would attract more players ignite further competition. As a result of increased competition, innovation would be the critical breakthrough to be placed amongst as market leaders.
  2. The rise of Mobile Internet. Indeed, compared to other parts of the world, China has the highest e-commerce retail sale plus the rate of QR code usage (113 million scans per month). 55 percent retail sale transactions were completed through mobile payment (only 19 percent in America). All of this stat reinforced the fact the Chinese consumers innovation expectations are very. Therefore, only innovative products/services may be able to dominate the markets and local players need to hurry up as they are already late to the party.
  3. Venture capital firms and angel investors. In the past decade, given the mountain of surplus funds in Chinese company treasuries, investments in innovative companies sped up to take advantage of the new Chinese economy (Eg.– Solar and Electric Vehicle technologies). These trends may likely continue during the phase from planned to market economy and drive hunger for innovation. In 2014, venture capitalist pumped a record $15.5 billion into Chinese startups with another $6.5 billion from the government.
  4. Copying can only get you this far. Interestingly copying is not helping, anymore. Whether it is China or Korea, more and more companies have figured that there is no substitute for hard work in innovation. Besides, companies in the developed world are innovating faster than product life cycles. Copying may get you to outdated technologies.

 

Coauthored by Sanjay Bonde and Frankie Xu 


Are you an Executive or a Leader?

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LinkedIn image for blog

It is not uncommon that I come across situations where people use the terms Executive and Leadership interchangeably, not knowing that they have distinct connotations. So what exactly does the world need for the next decade – Leaders or Executives? Let’s do a quick dipstick test – here is what dictionaries tell us:

ExecutiveDesignated for Execution. Leader One who goes first.

Here you may be able to note the stark difference between the two terms. From the former, (really boring!) you can almost immediately sense a mid-life crisis in the waiting, from the latter, however – an expectation of possibilities and pursuits. Recently an MBA colleague currently leading a billion dollar business in Asia, approached me to help determine his career roadmap, aka – try and help rewrite his resume and help get him a new job. It appeared that he had reached a point in his career – via corporate gravity – wherein he was neither able to relate to his position as a leader of a business under intense competitive threat, nor could he determine the best way to drive his career forward. His knowledge of the world outside his narrow domain was limited; he had only dealt with his peers in the company as his role models. His exposure to outside business practices, technology developments, business models and cultures was miniscule. Add to this the reality that market his business was flourishing in had sharply changed – margins had fallen, competition had increased, shareholder value was steadily eroding. My friend was navigating a ‘nowhere bound’ train!

In today’s fast-changing world, we have come to realize that product, service and business lifecycles are shortening. Technology and innovation developments are leading a reorientation of leadership roles; responsibilities and expectations at the top of the pyramid are being rewritten. So, here are the 6 key attributes that test your leadership capabilities and will catapult you into an effective leader are:

1. Ability to see beyond ‘range of visibility’
Where there is no vision, businesses perish. While the mission is set out as a guideline for the organization’s activity each day, vision gives a long-term orientation – the pathway to a future. The difference between a Leader and an Executive is the ability to place a compelling vision so that the day-to-day life and actions of employees are congruent, value driven and executed perfectly. The airplane pilots have the extraordinary ability to take off and land in poor visible conditions. Executives are people who accomplish assigned work efficiently. Leaders are people who envision the right things to be done with the right timing and the right resources.

2. Ability to onboard and manage extraordinary people

“The best executive is one who has sense enough to pick good people to do what he wants done, and self-restraint enough to keep from meddling with them while they do it”. —Theodore Roosevelt (1858-1919). I think Teddy Roosevelt hit the key leadership mantra in this simple yet not so commonly followed principle. One of the most outstanding skills of leaders is to dare and enjoy hiring talented people. The ability to successfully do this requires a great deal of inner security and conviction. You can easily detect good leader by assessing the strength of his/her direct reports. Tim Cook, Sundar Pichai and Satya Nadella are great examples of the leadership instincts of their bosses.

3. Ability to decimate your businesses before others do

Leaders are creative people who lead businesses in complex times, in which they change the basic substantive activities of the organization. A Leader’s role is to envision and create a new world and then re-create an even better one. Yahoo! had a vision and a good business that its leadership did not work to decimate nor re-create. Google did it for them and Yahoo!’s leadership now has the tough task of finding a new reality that it can create and own.

4. Ability to be technologically competent in several disparate domains

With rampant innovation and technology disruptions in several dimensions, it is becoming increasingly necessary that a leader be conversant with several different technologies at once, so that that can they can visualize future potential and pitfalls. Take an example from disruptions in the automotive industry led by diverse technologies such as: electrification, autonomous driving, vehicle sharing, user experiences, ecosystems, connected commerce and machine learning / artificial intelligence. Detroit is playing catch up to the EV industry, which is being led by Silicon Valley. It is difficult to imagine an automotive industry leader with capabilities that do not reach out to this vigorous disruption. Leaders ask ‘what and why’ while the executives ask ‘how and when’.

5. Ability to operate in a connected global environment

The world has already reached a super-connected state where an event anywhere in the world may impact your business faster and more seriously than you may otherwise think. Take for example business, economy, terrorism, banking, education, et al. To be complacent and disconnected leader is similar to being a smartphone with its data connection switched off! A globally connected business environment will need a globally connected leadership capability that harnesses opportunities and eliminates threats in real time.

6. Ability to switch gears and take high-speed turns.

Gone are the days where daily afternoon executive lunches stretch for a couple of hours, or the competition gives you 5 years to get your act together. Product, business, economy and political life cycles have truncated drastically, and so have the luxuries of response times. Like it or not, Leaders are now required to think on their feet and rapidly deploy decisions in teams that are equally responsive. The passive rent-collection type businesses are long gone and with them their leaders too. Today’s Leadership is much like precision sports with the ability to take high-speed turns (aka pivots) effectively.


India’s growth at 7.6 per cent is a true bright spot and one of the few bright spots in the global economy – Jim Yong Kim, World Bank President

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This reaffirms our hypothesis that world GDP growth will be dominated by India, and US (fueled by Silicon Valley) over the next decade.  Interestingly, the ties between these two geographies have always been strong and are growing stronger. Now is the time to harvest this opportunity, steadily and carefully.