K Srikrishna

The Entrepreneur Life

Month: November 2008

Decisions – how do we make them effectively

November 29, 2008 / / 0 Comments

Decision Making Chart

Life has a nasty way of springing surprises on you. The only certainty, it would appear, is that you will encounter a lot of uncertainty. Being an entrepreneur is no different. If you are like me, you might have thought you made your hardest decision when you chose to become an entrepreneur.

Wrong! Before you know it, the business, customers, employees and the world at large are bringing problems that require you to make decisions. There also seem to be few easy decisions. Why didn’t anyone tell you about this? Well, you heard it here first — much of your productive time as an entrepreneur will go to making, hopefully, good decisions.

“Effective executives do not make a great many decisions. They concentrate on the important ones,” says Peter Drucker in his book The Effective Executive. Simple as Drucker’s assertion sounds, it is hard in the fog of entrepreneurial battle to focus on the important few. So how do you identify the important from the merely urgent or routine problems? Having identified these, how can you make good or effective decisions?

Is this your decision?
The best way to make good decisions is to first determine if it is even your decision to make. Entrepreneurs — and here I speak with some experience — love to be in the thick of things. “The equipment is stuck in Customs. We won’t be able to ship our product on time. What do we do?” “He won’t accept our offer without a joining bonus. Should we offer him one?” “The customer will not issue a purchase order without a penalty clause. Do we agree to one?”

Issues like these will keep popping up all the time. While you may love playing Captain Crunch, the one everyone goes to for decisions, you would be mistaken to offer one for every question posed. If you want your business to grow and, importantly, if you want to have a personal life, it is critical that most decisions be made by other people. That is the first decision you have to make every time, answering the question: Is this a decision someone else should be making?

So how do you determine which decisions are yours to make? I’d recommend that you use the following simple guideline — if a year from now it would still matter what decision you make now, then it is probably something you want to be involved in. For instance, agreeing to a penalty clause in a multi-year contract with the Government will matter. Similarly, anything that involves the culture of your organisation or shareholding or capitalisation would make the cut. Most other decisions can probably be made by someone else. Which of course brings up the question: How do you ensure that the decisions others make do not drown your business?

Decision mechanics
Having a well thought out and tested process for decision making will not only help you but your entire team make the right decisions. Here again, I refer to the work of Peter Drucker who spells out a five-step decision-making process. They are:

  • Comprehending the nature of the problem or decision — is it generic or an exception?
  • Understanding the boundary conditions of the problem.
  • Figuring out the right solution without considering real world compromises that might be needed.
  • The action required to execute the decision.
  • Validating the appropriateness of the decision once taken.

At first glance, it may seem tough to figure out what to do if your product won’t ship on time. Most operational issues do not require executive decision making. As in the example of agreeing to a penalty clause in your Government order or deciding to do business with the Government or setting up an overseas distributor — issues that will have a long-term impact on your business — a well thought out process helps. Further, it allows your senior staff or other partners to use the same methods and yardsticks to make their decisions. This way your direct presence or involvement is not needed in each time.

Drucker makes the point that one rarely encounters truly exceptional cases. Most situations you encounter, even if new to your business, are generic and would require a rule to be fashioned. “We don’t sign penalty clauses in our contracts or any penalty or liability clause cannot exceed the value of the contract itself,” is a rule you can formulate. “We may offer discounts or walk away but no penalty clauses,” is another. It is critical to define the problem before you attempt to make a decision. This requires the first three steps to be followed rigorously. Subsequently, dealing in the real world rather than in some ideal scenario, it is important to ensure that the solution is effective. And this should not merely be faith-based but data-driven; such validation after a decision is made will ensure you continue to make good decisions or learn from bad ones.

The five steps could take a few minutes in some instances and a few weeks in others. Either way, it will help you make measured decisions. Needless to say no process is infallible and good leaders trust their instincts. Of course, great leaders know when not to rely on their instincts but to get the data first.

Not making a decision is a decision
The former Indian Prime Minister P. V. Narasimha Rao epitomised the art of non-decision making or so it seemed. Legend has it that he’d avoid making difficult decisions and in time, the problem would disappear or resolve itself. As an entrepreneur you will rarely have the luxury of ignoring decision making. That is not to say you will not do it. I have avoided the hard decision to let go of some difficult employees, as my staff keep reminding me frequently. Such avoidance of decision making is the classical ostrich-sticking-its-head-in-the-sand syndrome.

It is critical to recognise that it is a legitimate decision when you decide to not make a decision. It’s worth reading the previous sentence more than once — it is not intended as a play on words. Choosing to not make a decision is completely different from avoiding a decision. The difference is that you have made an explicit choice, one with consequences that you understand and are prepared to live with. Such a choice is particularly appropriate when it is evident that the situation will take care of itself. More importantly, it is of little importance, even if annoying, and is unlikely to have any material impact. In such circumstances, it is worth keeping in mind the Roman edict, “De minimis non curat praetor”or “the magistrate does not consider trifles!”

This article was published in the Business Line print edition dated November 17, 2008

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Decision making for Entrepreneurs

November 17, 2008 / / 0 Comments

Life has a nasty way of springing surprises on you. The only certainty, it would appear, is that you will encounter a lot of uncertainty. Being an entrepreneur is no different. If you are like me, you might have thought you made your hardest decision when you chose to become an entrepreneur. Wrong! Before you know it, the business, customers, employees and the world at large are bringing problems that require you to make decisions. There also seem to be few easy decisions. Why didn’t anyone tell you about this? Well, you heard it here first — much of your productive time as an entrepreneur will go to making, hopefully, good decisions.

“Effective executives do not make a great many decisions. They concentrate on the important ones,” says Peter Drucker in his book The Effective Executive. Simple as Drucker’s assertion sounds, it is hard in the fog of entrepreneurial battle to focus on the important few. So how do you identify the important from the merely urgent or routine problems? Having identified these, how can you make good or effective decisions?

Is this your decision?
The best way to make good decisions is to first determine if it is even your decision to make. Entrepreneurs — and here I speak with some experience — love to be in the thick of things. “The equipment is stuck in Customs. We won’t be able to ship our product on time. What do we do?” “He won’t accept our offer without a joining bonus. Should we offer him one?” “The customer will not issue a purchase order without a penalty clause. Do we agree to one?”

Issues like these will keep popping up all the time. While you may love playing Captain Crunch, the one everyone goes to for decisions, you would be mistaken to offer one for every question posed. If you want your business to grow and, importantly, if you want to have a personal life, it is critical that most decisions be made by other people. That is the first decision you have to make every time, answering the question: Is this a decision someone else should be making?

So how do you determine which decisions are yours to make? I’d recommend that you use the following simple guideline — if a year from now it would still matter what decision you make now, then it is probably something you want to be involved in. For instance, agreeing to a penalty clause in a multi-year contract with the Government will matter. Similarly, anything that involves the culture of your organisation or shareholding or capitalisation would make the cut. Most other decisions can probably be made by someone else. Which of course brings up the question: How do you ensure that the decisions others make do not drown your business?

Decision mechanics
Having a well thought out and tested process for decision making will not only help you but your entire team make the right decisions. Here again, I refer to the work of Peter Drucker who spells out a five-step decision-making process. They are:

  • Comprehending the nature of the problem or decision — is it generic or an exception?
  • Understanding the boundary conditions of the problem.
  • Figuring out the right solution without considering real world compromises that might be needed.
  • The action required to execute the decision.
  • Validating the appropriateness of the decision once taken.

At first glance, it may seem tough to figure out what to do if your product won’t ship on time. Most operational issues do not require executive decision making. As in the example of agreeing to a penalty clause in your Government order or deciding to do business with the Government or setting up an overseas distributor — issues that will have a long-term impact on your business — a well thought out process helps. Further, it allows your senior staff or other partners to use the same methods and yardsticks to make their decisions. This way your direct presence or involvement is not needed in each time.

Drucker makes the point that one rarely encounters truly exceptional cases. Most situations you encounter, even if new to your business, are generic and would require a rule to be fashioned. “We don’t sign penalty clauses in our contracts or any penalty or liability clause cannot exceed the value of the contract itself,” is a rule you can formulate. “We may offer discounts or walk away but no penalty clauses,” is another. It is critical to define the problem before you attempt to make a decision. This requires the first three steps to be followed rigorously. Subsequently, dealing in the real world rather than in some ideal scenario, it is important to ensure that the solution is effective. And this should not merely be faith-based but data-driven; such validation after a decision is made will ensure you continue to make good decisions or learn from bad ones.

The five steps could take a few minutes in some instances and a few weeks in others. Either way, it will help you make measured decisions. Needless to say no process is infallible and good leaders trust their instincts. Of course, great leaders know when not to rely on their instincts but to get the data first.

Not making a decision is a decision
The former Indian Prime Minister P. V. Narasimha Rao epitomised the art of non-decision making or so it seemed. Legend has it that he’d avoid making difficult decisions and in time, the problem would disappear or resolve itself. As an entrepreneur you will rarely have the luxury of ignoring decision making. That is not to say you will not do it. I have avoided the hard decision to let go of some difficult employees, as my staff keep reminding me frequently. Such avoidance of decision making is the classical ostrich-sticking-its-head-in-the-sand syndrome.

It is critical to recognise that it is a legitimate decision when you decide to not make a decision. It’s worth reading the previous sentence more than once — it is not intended as a play on words. Choosing to not make a decision is completely different from avoiding a decision. The difference is that you have made an explicit choice, one with consequences that you understand and are prepared to live with. Such a choice is particularly appropriate when it is evident that the situation will take care of itself. More importantly, it is of little importance, even if annoying, and is unlikely to have any material impact. In such circumstances, it is worth keeping in mind the Roman edict, “De minimis non curat praetor”or “the magistrate does not consider trifles!”

This article first appeared in print in the Hindu BusinessLine in Nov 2008.

5 Things To Do While You Still Have a Job

November 16, 2008 / / 10 Comments
Resume

Photo Credit: kiwikewlio via Compfight

Last week I had called a friend, with the idea of pitching our newsletter services. However the conversation rapidly turned to the unhappy state of affairs in my friend’s company. Layoffs, spending cuts and a lock on the stationery cupboard (okay, I made that one up!) My friend was expecting the axe to fall again (& yet again, definitely on spending if not on people) and hoping that he’d survive. Of course having taken the job less than three months earlier, he was not keen to move — even if the job market were good — which it most definitely wasn’t.

While I commiserated with my friend on the call, it set me thinking. A little bit of calling around made me realize that my friend was by no means alone. There seem to be hordes of folks, just hanging in there — some who actually like their companies but are caught in semi-stasis and yet others would like to get the heck outta there, but can’t, till the market gets better. The shameless fellow I am, I urged all of them to quit and start their own business. Being good friends (at least one of them) they curbed their urge to lug something at me. For the rest of the folks that are hanging in there, here are five things to do, while you still have a job.

  1. Read – no, reading this blog does not count (not you mom!) – read stuff that you had intended to; whether the speeches of Cicero, The Artist’s Way, Writing Down the Bones, RK Narayan or What Color is Your Parachute? The classics whether the Mahabharata, modern renditions of the Ramayana or Homer’s Illiad will also do nicely. Or the first book that you come across next. Do this with a clear and committed goal (tell a friend to keep you honest) – one book a week or whatever turns you on. But treat this as you’d a project at work. Before you know it you’d be one well read person or at least on the road to becoming one.
  • Share – the simplest is to write about the book you’ve just read. Or if that seems too heavy – write little things that others might find useful at work – first aid at home, How to get a PAN card, MS Excel tricks, FAQs, Employee Stock Options in plain English. Or if you are truly inspired convert the whole thing into a blog and share it with the world. Remember to teach is to learn! If you aren’t ready, start with a journal – doesn’t have to be a blog. Just a good old diary, of your thoughts, aspirations, desires and dreams and share with a friend to start with.
  • Track your time – this is as good a time as any to see where your time goes – how much of it is spent Googling Daniel Craig or Sarah Palin, or just checking email or gossiping at the water cooler (“Can you believe what she wore to work today?”) How much time do your kids, spouse or significant other get from you? How much of it could have been spent on a treadmill or a nice weekend hike? The sweetest thing about being in limbo, is you’d have all the time in the world — put it to good use.
  • Network In the past, whenever someone gave me this advice, I always felt slimy — like one of those multi-level marketing guys approaching you at the grocery store or gas station (Don’t ask!) But thanks to the Internet, you can now pass it off as learning about Web 2.0. So sign up on LinkedIn, Plaxo (they are getting better), get your family on to Geni and if that’s not enough try Spock, FaceBook and MySpace. However keep point 3 in mind and track your time. Kidding apart, a slow business environment is the right time to re-connecting with all those folks from your past and meeting new folks. Of course with all your reading and writing you’d have much to share, yourself.
  • Create three CVs It never hurts to keep your powder dry. At the least you will get a good blog post or maybe even a full fledged article on “How to write a killer CV” if you prepare three CVs. It can be a useful exercise to reflect on where you are professionally and where you’d like to head towards actively. So create a professional CV, much like you’d have in the past, create a personal CV, stripping the professional parts out or re-stating them as useful life-skills, as though you were going to run for political office and finally create one as you’d like it to look like five years from now. Of course the reading, ‘riting and reflecting you’d have done would make this a piece of cake.

Once you are done with these five steps, still have job and time on your hands, start over at step one. Good luck!

The right time to start a business is NOW

November 16, 2008 / / 0 Comments
Photo: Theen ... via Compfight

Photo: Theen … via Compfight

“As soon as I get enough experience, I will start my own business,” is a common refrain of many prospective, usually young, entrepreneurs. “I need to understand how the value chain in retail works,” or “I will work in a small/large firm to learn this, that or the other,” are all reasons that I hear soon-to-be entrepreneurs give to put off getting started. I would assert that there is never going to be a better time to start your business than now, particularly with the current financial troubles that are roiling global markets and making everyone in business antsy. Even if it gets worse before it gets better, a downturn such as this is the best time to start a business.

The reason a downturn is a good time to start a business is three-fold in my view. First, prospective customers, though not always willing to part with money, will be prepared to give their time. Their time, which would be hard to come by in good times, will help you build meaningful relationships for the future. Even more importantly, it will help you comprehend what issues your customers truly care about and fold that into your product or service offerings. Finally, bad times are good times to learn how to make your dollar, pound or rupee go much further. Once you have learnt this lesson, it will serve you well through the rest of your business life. That being said, you don’t have to wait for a downturn to start your business. The sooner you get started, the sooner you will realise that you know even less than you thought you did and the sooner you will begin learning what you need to, and you will be far too busy to wonder if you have timed it right!

Build relationships

Lest I have not said it enough, businesses are about relationships. And relationships take time; often much longer than your business can afford and far more time than your customers can afford to give you. In that regard, the sooner you begin building relationships, the better off you are. Ideally you’d have embarked on this way before you started your enterprise. It’s worth pausing for a second here to comprehend what ‘building a relationship’ constitutes. Most of us intuitively understand the word relationship in the context of families, even though we may grimace or smile at the thought; friends; and social acquaintances, folks we know such as neighbours, friends of friends and relatives of friends. So what does it mean in the context of a business?

In my view, simply put, a relationship in a business context, much like in the rest of our life can range from casual acquaintances all the way to life-long friends or occasionally a spouse. A relationship moves from being one of merely dealing with one another (cold calling in sales or collecting a purchase order or payment from finance) to a more meaningful one, when both parties are prepared to share and give of their knowledge, time and energy. This could be sharing thoughts on the marketplace in general, what other companies or folks are doing, all the way to each others’ key care-abouts, concerns and plans.

Meetings over coffee, attending a trade show or seminar together, playing together (from billiards to white-water rafting) or dinner followed by karaoke all help build a relationship. Not all relationship building need be done face-to-face — SMS or texting breaking news or a thought for the week, e-mailing interesting items of business or personal interest, newsletters, telephone calls or even the occasional instant message (IM or chat) can all help build relationships. Of course, be sensitive to the needs of the other party; you don’t want to be seen as a spammer or worse yet, a stalker! When in doubt, err on the side of less not more.

Notice most methods of building relationships are not transactional and even when interacting for a transaction, doing what your mother advised you to do — making small talk, being polite, saying thank you, all go to building a better relationship. And there is no better time to build relationships than now, so get started.

Validate market needs

One of the sheer joys of being an entrepreneur is the number of times you get turned down for appointments, let alone capital, loans or purchase orders. The fact that we persist and actually thrive despite this speaks of our faith in what we are doing. While such faith is good and even necessary, it can be just plain wrong. A good way to ensure that you don’t expend all your cash, emotion and energy barking up the wrong tree is to validate what the market needs. Such validation is a lot easier said than done.

Most consumers or customers don’t know if they really need something, especially if it is not something they have encountered before. Prior to Hotmail or more recently FaceBook people were not clamouring that their lives were incomplete; nor did the absence of mini-vans or flat panel plasma displays or soap in Re 1 sachets lead to consumer revolts. As Badri Seshadri, founder of New Horizon Media, a leading publisher of non-fiction in Tamil stated, “Supply has to lead demand, sometimes.” It is here that having built relationships with others in the business, you can seek to have your ideas reviewed, critiqued and if lucky validated.

As with New Horizon, sometimes there is no alternative but to get your product out there, but even then, you can validate the market need through calibrated testing be it pricing, and in their case distribution channels and different book titles. The market not being a static entity will require you to continuously measure it and tweak your response. Downturns are again good times for this for customers and the marketplace will be willing to provide you more time and greater feedback. However, given the ongoing need for testing the market, the sooner you embark on it the better. So once again, there is no better time to validate market needs than now.

Learn frugality

One of the biggest mistakes I made when I first considered starting a business was to blow nearly $200 (yes, two hundred dollars) on fancy business cards. Granted this was 12 years ago, when I was a callow youth and some credit must go to my printer who up-sold me on the expenditure. Besides never doing business again with that printer, I learnt the hard lesson that money is better spent (or not) on so many other things than fancy business cards. But it is never too early to learn the lesson of frugality.

No company, however big, can afford to not watch its spending and particularly its cash position — this was true even before Lehman Brothers filed for bankruptcy. While there is a fine line between being frugal and being a miser, it is best learnt by constant practice. Yes, money has to be spent in order to build and grow a business, but how much and when is always a matter of debate. Most folks entreat employees to spend the company’s money as if it is their own, but then again most folks don’t manage their own money too well. It’s best to ask yourself ‘why’ three times — Why am I spending this money? Why now? Why this much? Bad economic times are good times to learn about frugality for you see so many people around you — your customers, partners and suppliers — practising it. Don’t be a laggard and don’t wait for bad times to practise it.

As with most advice, take this entreaty to be frugal as a good thumb rule, but use your own judgment on each occasion for there will be good times, particularly in downturns, to invest for the future.

Trust your instincts and if you have built relationships and continuously validated the market needs you’d have good reason to back your instincts.

This article first appeared in the  Hindu BusinessLine in November 3, 2008.

3 Keys to Making Your Board Effective

November 15, 2008 / / 0 Comments

When I wrote my first article for Outlook Business, on why a board of advisors is important for start-ups, a couple of folks wrote to me asking about best to handle having a “wrong” board member. Jack and Suzy Welch have discussed this at some length in a BusinessWeek column of theirs.

I decided to added my two-cents to the discussion.

Photo: nateOne via Compfight

Photo: nateOne via Compfight

“Anybody can just ask questions! I bring up a problem because I need help. What’s the point of asking questions or giving a lecture without offering any help?” This lament came from a friend, who was VP-Engineering at a technology firm. He had just returned from a board meeting, where he had presented a paper on the development status of the company’s newest product, only to have a board member bombard him with questions. “And the chairman just sat silently.” My friend’s predicament reflects the question on the role of a good board member. As a reader recently posed: “What if you get the ‘wrong’ person on your board?”

Start-ups particularly, and entrepreneurial firms in general, can use the benevolent oversight of an experienced team that a good board of directors can be. If finding the right people for the board is an important task, getting an inappropriate or incompetent member off the board is even tougher. Therefore, one needs to have a clear understanding of who would be a good board member for a company.

Picking out a director is not always in one’s control, unlike hiring a key employee. Therefore, this should be treated with care and due diligence. Even if venture capitalists or bankers supporting a company want to have someone specific on the company’s board, or if a company or entrepreneur invites an eminent personality to the board, following some basic ground rules can help avoid problems that may arise later.

Expectation setting To start with, list down your expectations from an incoming board member. This can be specific, as in structuring employee shareholding or other equity matters, or be more generic, as in strategic review or industry networking. Meet the member outside, ideally prior to a board meeting, to comprehend and get acquainted with his motivations for being a board member.

Role setting At the meetings, designate clear roles, particularly that of a discussion leader, so that participation can be both balanced and, where needed, encouraged. Most importantly, run the meetings on the clock, hard as it will be, to prevent it being hijacked. At the end of each meeting, ensure feedback is captured and, later, circulated with the meeting minutes to keep board members informed and accountable.

Weeding non-performers Despite one’s best efforts, as in hiring, occasionally one runs into a poor fit with a board member. A typical board will rather avoid having to deal with a non-performing member than address what could be a potentially embarrassing and even painful process of persuading a non-performing director to leave. Often, board members tend to be seniors or retired executives, and this makes it difficult to pull up non-performing board members. In India, age and culture are further barriers to holding senior board members accountable. However, an entrepreneur rarely has the luxury of carrying the dead weight of a couple of bench warmers.

The best way to deal with this situation is directly, but subtly. Work with your Chairman, assuming he’s not the problem, and validate your concerns and perceptions. Sit down with the board member with whom you have issues and try to find common ground. Insist on the board assessing itself twice a year, ideally against benchmarks, so that any conversation with individual board members can be held in the context of the board’s own benchmarking data. Pose all challenges and concerns in the context of the company, and never make them personal. Finally, ensure that any solution is face-saving for the individual board member concerned, as you never know whom you might have to work with again.

This article first appeared in Outlook Business in November 2008.

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