Sustainable Business Transformation

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Five Fundamental Principles of Partnership

Posted by Hemant Puthli on October 4, 2011

In our professional, social and personal worlds we interact with various entities in the course of our day-to-day activity. Such entities include corporations and commercial enterprises with whom we transact business or work for, social associations and networks that we are members of or are affiliated to, and individuals with whom we have emotional ties, such as family and friends. In some cases our interactions are limited to minor transactions of a specific kind that are short-lived and sporadic (i.e., they do not exhibit a definite pattern of recurrence and do not show signs of an on-going life stream), whereas in other cases we engage more deeply and along multiple dimensions, and experience a sense of continuity over a longer term. Interactions of the latter kind tend to be more aligned with long-term strategic objectives than short-term tactical goals or operational targets, and collectively constitute a “relationship” between the entities concerned.

We consider our relationships with entities on “our side” (i.e., having shared interests and common goals) as alliances or partnerships, and relationships with entities on the “other side” (i.e., having inversely correlated interests or conflicting goals) as adversarial or competitive. There could also be relationships which are neither, but they are more likely to be obligatory in nature (e.g., with regulators). Alliances and partnerships are founded on a unique set of principles that distinguish them from other types of relationships or streams of interaction. While most of these may seem obvious and common-sensical, it may be useful to explicitly list them down, to serve as a checklist for building strong and sustainable partnerships, and as a guide to avoiding some of the typical pitfalls.

1. Two-way exchange, based on give and take: Partnerships exemplify the old adage — it takes two hands to clap. Asymmetric partnerships, where one partner does all (or most) of the giving and the other does all (or most) of the taking are usually short-lived. For a partnership to be sustainable, the giving and the taking must remain commensurate, or at least perceived to be so by both partners. The terms and conditions (tacit or spelled out) that form the basis for a partnership define the nature, scope and quantum of the give and take between partners, and as such may be taken to represent a kind of social contract (if not a legal one).

2. Fair exchange of value:  The terms of engagement in such social or legal partnership contracts are understood to represent a fair exchange of value between the partners. In formal contracts between governments, corporations and other organizations, such terms are explicitly spelled out in a document signed-off by both partners. In informal relationships such as friendships, romantic relationships etc. the terms are usually implicit. However, disconnects can and do happen, when such implicit terms are either not fully understood or are interpreted differently by one of the partners.

3. Peer-to-peer, not master-slave: Because partnerships are based on engagement terms that represent a fair exchange of value, partnerships are intrinsically relationships of equals, and neither side can honestly claim to have an “upper hand” over the other. Quite often, one partner tends to be more dominant and drives the relationship hard. Traditionally, in the commercial world, customers tend to drive their suppliers hard by leveraging their power of choice, just as in male-dominated societies it is considered normal for husbands to dominate over their wives. Such tendencies erode the sustainability of the partnership and weaken it, generally speaking. (There are exceptions, of course — some personal relationships are based on dominant/ submissive duality, out of choice by both partners.) In the most extreme cases, relationships in which one partner oppressively and consistently dominates over the other may be termed “abusive”.

4. Commitment to continuity: Partnerships are built on commitments (by both partners) to common goals and shared interests within the framework of the terms of engagement. Unless explicitly time-bound, such commitments are presumed to continue indefinitely. When circumstances change and a partner is unable to honor the commitment, it may be time to review the terms of engagement and either negotiate a new set of mutually acceptable terms and conditions (that constitute a fair exchange of value under the new circumstances) or agree to disagree i.e., discontinue the partnership.

5. Enduring trust is built by fulfilling promises of mutually rewarding positive sum outcomes: Before engaging with each other, partners go through a careful selection process and pick the one that they believe best embodies the promise of a win-win relationship. The typical metaphor for this preliminary phase is “courtship” or “dating”.  Promises made during this selection process are validated during the initial period of engagement, which is critical to the establishment of mutual trust and confidence in each other’s ability and commitment to deliver on the terms of engagement.  After the “honeymoon” period, the more each partner continues to enrich the relationship with outcomes that bring prosperity and success to both partners, the stronger the partnership grows. The trust between the partners deepens as more and more promises are fulfilled, more and more often.

The principles listed above are equally valid at organizational as well as individual levels, in professional, social and personal contexts. When partnerships fail, it would invariably be on account of violation of one or more of these principles. On the other hand, the most vibrant and fulfilling partnerships are found to be highly successful on each count.

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Posted in Governance, Organization, Society, Strategy | Tagged: , , , , | 1 Comment »

HPA Perspective on Sustainability: FAQs – 5

Posted by Hemant Puthli on May 10, 2010

This is the fifth in a series of 6 posts on our perspective on sustainability. Our first post focused on our definition of sustainability and the second explained what we mean by ’social relevance’, ‘environmental responsiveness’ and ‘economic viability’. The third dealt with the notion of ‘Common Good’ in contrast to ‘Self-Interest’, and why the pursuit of the Common Good leads to better sustainability. The fourth post discussed the challenges along the path to sustainability in a competitive situation and also elaborates upon the key areas of difference between partnerships and competitive relationships.

This post looks at the sustainability theme from an investor’s perspective and explores how it plays out for the shareholders of an enterprise that embarks on a sustainable business transformation journey.

Shareholders are interested in two things, generally speaking: earnings or dividend per share, and appreciation of the share price in the stock market. How can corporations meet shareholder demands if they pursue Sustainable Business Transformation the way you define it? Why would shareholders invest in or care about social relevance or environmental responsiveness?

Let me ask you this – as a shareholder, which of these two alternative scenarios would you prefer: (a) get higher returns in the short-term but remain uncertain about future returns, or (b) get moderate returns in the short-term but be confident that such returns will continue to accrue over a longer duration? Which scenario represents more value to you? Clearly, a majority of the population would prefer the latter. (Note that this excludes short-term speculators, who are an exception to the rule since they have different financial goals and risk appetites.)

Sustainability Tilts The Balance

The mandate to business therefore is to focus more on the promise of sustainability of profit in the long run, rather than on maximizing gains in the short run at the risk of uncertainty about the future. (Unfortunately, the practice of quarterly reporting of results tends to encourage focus on the short-term in terms of the company’s approach to performance as well as investor outlook.) The challenge to businesses on a Sustainable Business Transformation journey is to move their investors from scenario (a) to scenario (b). It is imperative that businesses educate their shareholders and inspire confidence in them, to believe that they will sustain a certain level of returns in the long run. A lot depends on the quantum of shareholder trust earned and enjoyed by the business. Businesses that haven’t worked on generating the kind of credibility which is a pre-requisite for that kind of trust may not be successful in building investor confidence along these lines.

The problem today is that the number of players with short-term interests is rapidly increasing, to become a considerable force in the financial markets. This is happening because of the combination of two factors: perceptions of scarcity and uncertainty about the future on the one hand and temptations to make a quick buck in markets that have become too complex to regulate effectively on the other. And this in turn is leading to the devolution of the principle of common good into its primitive version of instinctive self-interest. Such trends erode (as opposed to support) sustainability and must be arrested and reversed. It’s like traffic rules: what might happen if more people break rules just because a few guys broke them and got ahead.

This is one of the biggest challenges faced by the Sustainable Business Transformation journey and can only be addressed by increasing awareness and educating investors relentlessly. We are not saying it is easy — on the contrary, it is an uphill task, but we have to start somewhere, otherwise the logical extension and spread of such trends will result in anarchy. Hopefully some of the regulatory reform in the wake of the global financial crisis will plug gaps that could be exploited to make a quick buck and discourage reckless opportunism, at least to an extent.

There are already several organizations that focus on Socially Responsible Investing (SRI). Their purpose is to educate, encourage and enable investors to develop investment strategies aimed at the more holistic view of sustainability. Similarly there are other trends that are gaining momentum of late: social enterprise and social entrepreneurship, which essentially deal with the application of the principles and disciplines of enterprise and entrepreneurship to socially and/ or environmentally focused work. Historically, this has usually been the domain of non-profit charities funded out of philanthropic or ethical considerations. The new social entrepreneurship movement is changing that paradigm, by proving that social/ environmental projects can run just like any other business, except that its customers (and possibly also its core stakeholders) belong to different types of communities compared to traditional businesses.

This brings us to a very interesting observation: as traditional profit-oriented businesses become more socially and environmentally focused (either due to SRI or other pressures or arising out of their own realization), social development organizations will become more like regular businesses, with a sharp focus on efficiency and returns. These worlds will soon start resembling each other so much that they will finally merge into a single approach to all business, focused on the triple bottom line.

Our next and final post in this series will deal with the urgency of the need for businesses to embrace sustainability.

Posted in Economics, Strategy | Tagged: , , | 1 Comment »

Can Innovation Build Sustainable Competitive Advantage?

Posted by Hemant Puthli on April 23, 2010

With all this hype buzzing around the idea of ‘Innovation’ I was curious to know how people thought about Innovation as a source of competitive advantage in a world where competitors were also pursuing the very same idea. I posed the following question at LinkedIn: Does Innovation give an enterprise a sustainable competitive advantage if their competition is also doing it?

My question drew considerable interest and several good answers — the general sense was that Innovation is relevant only if it represents additional value in the eyes of the customer and/ or other stakeholders in the business ecosystem. In that sense, most people seemed to think that it was not really a matter of whether or not, but a matter of how to make Innovation work for the enterprise.

The most original, relevant and comprehensive answer came from Nilesh Khare — a friend and former colleague (PwC), by email and is not posted at the LinkedIn Q&A page. I am sharing it here with his permission, and hence this may be regarded as a guest post by an associate (with minor edits by me).

Competitive innovation efforts may not lead to competitive advantage. Per se, competitive efforts at innovation are neither necessary nor sufficient. There are many aspects to the relationship between innovation and competitive advantage. I will cover some in my response here. Broadly stated, innovation alone is not enough. Only under specific conditions is innovation likely to lead to sustainable competitive advantage.

1) Research suggests that roughly 60% of patents get copied within 4 years of their filing, at substantially lower cost to the imitating rivals. It follows that when innovation can be copied efficiently it may not lead to sustainable competitive advantage.

2) Innovative first mover advantages can be retained if they lead to one or all of the following: buyer’s switching costs, technological leadership, and/or preemption of resources.

3) When only a few of the competitors can efficiently and effectively innovate or imitate each other’s innovation, a duopoly or oligopoly may emerge. Successful players may not have significant competitive advantage over each other, but each one of them will have substantial advantage against many other players (potential entrants): the soft drink industry may offer an example (in the context of packaging/ vending/ product line innovations).

4) Innovators may not always capture the gains. Innovation may depend on complementary resources for commercialization. Gains may be captured by the providers of such resources. IBM opening “PC standard” lead Intel and MS Windows to capture all the gains. Similar arguments are usually given to explain why big pharmaceutical companies may get more advantage out of drugs discovered by small “strategic” partners.

5) Innovation may be related to standards (such as VHS). Standards may be established through network effects — products for existing users become more valuable as new customers adopt the same standards. In many cases the network effect leads to “winner takes all”. Substantial competitive advantage is implied. The standard that wins does not have to be technically superior — VHS and QWERTY key board are usually cited as examples. Other examples include MS Office, Windows, Adobe etc. In some cases, multiple standards can co-exist, however. For example GSM and CDMA in wireless telecom. Radical v/s evolutionary innovation approach could be one of the ways to think about the possible outcomes of war of standards.

6) Joseph Schumpeter characterized some innovations as disruptive, which could well become game-changers. Many innovative business models on Internet were potential game changers, but the one who innovated was not necessarily the one who succeeded.

7) Lastly, a firm may innovate but fail to recognize the importance of its own innovation or to monetize/ commercialize it. Xerox’s Paulo Alto Based Research Center (PARC) innovated many path breaking products including GUI and Mouse. But Xerox as an organization failed to capitalize on any of these.

As I said in the beginning, competitive innovation efforts are neither necessary nor sufficient to lead to competitive advantage. Despite the fact that innovation may not lead to competitive advantage, firms continue to emphasize innovation, since: (a) it may lead to sustained competitive advantages in some cases, (b) it may lead to competitive parity and survival, and (c) learning from innovative efforts, despite being a possible short term competitive disadvantage, may be a source of competitive advantage in the future.

Nilesh Khare is a Doctoral Candidate (Strategy) at the Fisher College of Business, Ohio State University, Columbus OH, and Assistant Professor of Management, American University in Dubai, UAE. He can be reached at: khare.11 [at] osu [dot] edu

Posted in Strategy, Technology | Tagged: , | 1 Comment »

That Old Debate Again: Profit Vs. Purpose

Posted by Hemant Puthli on April 15, 2010

McKinsey & Co. launched a website called “What Matters” some time ago, where they aggregate “knowledge derived from convening some of the best thinkers from around the world” (in their words).

“The Debate Zone” under their “Social entrepreneurs” section recently featured the topic Should social entrepreneurs adopt the language and practices of business?with expert opinions presented on both sides, and inviting reader comments. Before reading the rest of this post, it may be useful to click on the link above and browse through the two main arguments presented by Matthew Bishop, responding in the affirmative, and by Bunker Roy, against the motion. My comment is reproduced below and addresses the arguments presented by both:

There should be little doubt in anyone’s mind that the methods, practices and disciplines of business management are universally applicable to all kinds of organizations/ initiatives/ projects, and are useful in improving the likelihood of success when applied to just about any human endeavor – be it in the private sector, public sector or social sector.

‘Best Practice’ business is not just about scalability, it is also about effectiveness and efficiency at any level of operation. About doing the right thing and doing it right. It is about a having a sound strategy and executing it well, regardless of whether you’re a small business or a mega-corporation, whether you’re fighting a war or fighting for peace, and whether you’re doing it for money or out of love.

Management sciences are not evil; profit is not a bad word. Inefficiency, corruption, exploitation and malpractice are. And they can be found in any organization. Social enterprises are not inoculated against such malaises.

Ethical rectitude is not the privilege of the social sector alone. A business can be run with as much integrity as an altruistic mission. Yes, with as much fire in the belly too! Passion is not a prerogative of the “purpose-oriented” (as opposed to the “profit-oriented”). There is as much fun (and romanticism) in starting a technological revolution from a modest suburban garage as there is in starting a socio-economic one from a rustic mud hut.

One tends to polarize such topics so that they result in good polemics, but quite frankly, both extremes are undesirable. Profiteering is as undesirable as sloppy philanthropy. Charity brings its own issues with it as elaborated in this post: http://bit.ly/HPA_Charity

It is not impossible to seek profit through purpose. It is not so difficult for an enterprise to be purpose-driven and yet be profit-oriented. As individuals, we learn to achieve through our contribution to others. Similarly, mature businesses will seek to be successful through the success of their customers, stakeholders and other participants in their ecosystem.

At the time of posting this blog-post, my comment was submitted for moderation and yet to be published at the McKinsey site.

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HPA Perspective on Sustainability: FAQs – 4

Posted by Hemant Puthli on March 25, 2010

This is the fourth in a series of 6 posts on our perspective on sustainability. Our first post focused on the HPA definition of sustainability while the second explained what we mean by ’social relevance’, ‘environmental responsiveness’ and ‘economic viability’. The third dealt with the notion of ‘Common Good’ in contrast to ‘Self-Interest’, and why the pursuit of the Common Good leads to better sustainability.

This post discusses the challenges along the path to sustainability in a competitive situation and also elaborates upon the key areas of difference between partnerships and competitive relationships.

Are you suggesting that in a poker game winning players should start losing on purpose so that they can win eventually? How does sustainability work in a competitive situation? Why should a business yield any ground to competition? What is the common good when it comes to competitors?

For any given player in a poker game, the game represents a group of competitors, not an ecosystem of stakeholders acting in partnership with that specific player. A poker game, like all competitive games, is about winning and losing i.e., a zero-sum game. Such games are designed to result in winners and losers – everybody cannot win! Otherwise, where’s the fun? Zero-sum games hone the spirit of competitiveness and the ‘killer instinct’. Real life is neither a closed system nor is it close-ended in time, whereas games have a definite beginning and a definite end, a fixed set of players, clearly laid out rules and a finite, pre-defined number of possible outcomes. Zero-sum need not apply in all real-life situations. Unfortunately, though, not everyone sees that, and people tend to default to zero-sum thinking. Through our work, we hope to bring about an attitudinal shift that makes people look for win-win first. By default, every situation can result in a potential win-win outcome for all, unless there is evidence that is has got to be win-lose. This is one of our key messages.

Win-Win Partnerships Are Sustainable

Partnerships are based on interdependence. It’s not about one side winning and the other losing – that simply won’t work. In a partnership everybody must have a win, by and large, or else the partnership is not tenable. You may have micro-situations where someone wins (or wins more) and someone else loses (or wins less) and that’s OK. But if one partner wins almost all the time while the other loses almost all the time, the partnership is just not sustainable – it defies the very interdependence it is based on. This is empirically self-evident and does not need to be proved as a theorem using deductive logic. The business stakeholder ecosystem is a value network of interdependent partners, not competitors. Mature and responsible players will look to negotiate a win-win outcome in situations where partners have different needs and bring different agendas to the table.

That said, let’s go back to the poker game analogy. Let’s envisage a very real situation, in which a few friends meet on weekends and play poker. This can continue ad infinitum as long as it doesn’t happen that a single player consistently wins and eventually leaves the others broke. In a card game there are two factors that determine the outcome, broadly speaking – the cards one is dealt and the skill with which one plays them. A player cannot control what cards are dealt to them and you could call this the luck factor. If a player starts to do that, it is called cheating and we’ve already talked about why that’s not sustainable. What a player can control is their own card play, but not the cards that arrive in their hand in a given deal. Hence it is a statistical near-impossibility that one player wins all the time, assuming fair play and assuming a more or less even distribution of skills around the table. This is also how it works in competitive scenarios.

Sustainability does not mean that a better player should allow others to win. Players should follow rules. If one player’s skills are outstanding and they end up winning most of the time through fair means, notwithstanding the luck factor, then they should look to play in their own league if they want to keep enjoying the game. If they play with significantly lower-skilled players, they will take away all the wealth and others will go bust. Game over.

In business this is the equivalent of one player dominating the market by leveraging their ‘sustainable competitive advantage’ and edging out competitors. They don’t yield any ground consciously, but over time, but they could become complacent and the other players could overcome barriers, make a comeback and give them a run for their money. Life is open-ended and keeps going on indefinitely and today’s loser may become tomorrow’s winner. Games, like novels and movies, are close-ended and finite.

The common good in a competitive situation will be evident in issues that impact the long-term growth of the industry and market as a whole. That’s where competitors may collaborate on initiatives to consolidate and stabilize the economics of that industry and to improve and grow the market. Or they may simply share best practices to improve efficiency in non-competitive areas. Note how automobile manufacturers in the US came together to approach the Government for help recently. Also note how Toyota’s performance is different from, say GM’s, thanks in part to their green initiatives, while other automakers simply went on a downward spiral, thanks in part to their alignment with the vested interests of oil companies.

To summarize, we are saying that when it comes to partnership, it is most sustainable to ask the question “What’s in it for me?” after answering the question “What’s in it for my partner?” as compared to either not asking “What’s in it for me?” at all (i.e., charity), or only asking “What’s in it for me?” (i.e., primitive self-interest).

Our next post will look at the sustainability theme from an investor’s perspective and will explore how it plays out for the shareholders of an enterprise that embarks on a sustainable business transformation journey.

Posted in Economics, Environment, Society, Strategy | Tagged: , , , , , , | Leave a Comment »

HPA Talk: CleanTech Mentoring Workshop

Posted by Hemant Puthli on March 19, 2010

[Text of a talk delivered at the ‘CleanTech Mentoring Workshop‘ on March 19, 2010 aimed at introducing HPA and outlining the scope and nature of our advisory services]

Good afternoon!

First, let me thank TiE Mumbai, CII and New Ventures India for hosting this event and for inviting me to talk about who we are and what we do. I shall endeavour to keep this simple and brief, along the lines of an “elevator pitch” as it were, since the time allocated is quite short.

Think of HPA as a network of independent experts — high-content, seasoned industry professionals — brought together by a shared vision and held together by bonds of trust. Trust in each other’s capabilities as well as value systems. Since our associates are based in different geographies across the world, and also travel a lot, we use technology and communications tools to collaborate on projects and work as a virtual team. Quite often, we refer to HPA as an experiment in cooperative consulting, since each of us has their own independent practice as well, but we come together on a common platform to serve clients that need specific competencies that our associates bring. Each of us has had prior work experience of anywhere up to 25 years with some of the biggest global brands in our respective industries. So that’s a one-minute overview of who we are.

Regarding what we do. Simply put, we help businesses perform better through more effective use of technology, and we help technology providers perform better by strengthening their business management capability. Our work centers around the meeting ground of business and technology and we approach this intersection from both sides, assisting buyers as well as sellers through advisory services focused around Strategy and Governance. We weave our advisory services around the theme of sustainability, which we characterize by 3 criteria: social relevance, environmental responsiveness and economic viability. This is conceptually very similar to the “triple-bottom-line” approach or the “3P” model which I’m sure most of you may be familiar with. In this way we distinguish ourselves from traditional management consultants and business advisors with their legacy frameworks and methodologies.

In our experience, we have observed that each technology start-up is born out of a unique combination of two great strengths — technology innovation capability and the spirit of entrepreneurship. However, there is a third ingredient that goes into the secret sauce which makes a start-up successful. It involves depth of management capability and in many cases this is not always abundantly present within the start-up core team.

Let’s be clear about this: things like vision, strategy and risk appetite cannot be outsourced. The start-up already has some kind of a vision and some kind of strategy in mind, and has already placed its bets on its execution capability, else it would not exist. But what start-ups do require is help in the articulation and independent validation and verification of the entrepreneurial vision and strategy. And from that point on, they need help in aligning the various delivery vehicles that will translate ideas into action. That is where we come in — we help social entrepreneurs, including cleantech companies like yours, by offering the depth of our collective mix of management expertise and experience that you can draw on, to do the following things: shape your strategy and develop your business plans, build and enhance your execution capability and help in governing your operations. As a bonus we also sometimes throw in the ability to leverage our collective Rolodex of contacts, where possible.

In a nut-shell, that is what we do, and I would be delighted to meet the cleantech entrepreneurs over lunch, answer questions and explore mutually rewarding opportunities.

Thank you!

Posted in Governance, Strategy, Technology | Tagged: , , , , , , , | 4 Comments »

Case Study in Social Entrepreneurship: Grassroutes

Posted by Hemant Puthli on March 15, 2010

[Content sourced from Inir Pinheiro, the social entrepreneur behind Grassroutes, and edited by Hemant Puthli]

India’s remote villages are now attracting city dwellers who are eager to step away from the stress zones of their office cubes and the complexities of urban life, in search of clean air and a simpler, earthier way of life – if only for a few days.

The village of Purushwadi is 140 miles (220 km) away from Mumbai city, the hub of international business and the financial and entertainment capital of India – a hot, grimy, polluted, noisy and crowded metropolis of at least 20 million people living in the greater metropolitan area. But in a few short hours, inhabitants of the “Maximum City” can reach a different world, where they can swim in the crystal clear waters of a river, help farmers thresh wheat, chop wood with a long handled axe, and eat home–cooked meals with peasants in the dim light of their rustic homes. Purushwadi is perched high above mean sea level, in the jagged hills of Maharashtra. Life for the locals has hardly changed for several centuries. These simple farmers live in mud-brick houses with dried cow-dung floors and earn their income from the cultivation of rice, wheat, millet and pulses. There is no electricity or running water and the day revolves around hard work in the fields under the harsh rays of an unforgiving sun. As a tourism destination, this is not exactly a beach resort with plenty of five-star properties to choose from, each with a world-class spa to rejuvenate yourself. Villages like Purushwadi offer you rejuvenation of a different kind — deep hands-on contact with raw, authentic rural Indian life in its natural habitat. Tourists to Purushwadi say that their journey has been worth it, just for getting a refreshingly different perspective on life away from the daily routine of making money and climbing the career ladder.

About 70% of India’s population of 1.1 billion lives in the villages. As mega-cities like Mumbai expand, fuelled by the country’s economic boom, the gap between the urban rich and the rural poor widens as never before. It is not difficult to see how this could result in the making of a socio-economic time-bomb. Responsible rural tourism is one of the most effective ways in bridging this gap and bringing these disparate communities together. Responsible rural tourism involves, for example, bringing city slickers and urban youth groups from places like Mumbai to villages like Purushwadi for a weekend. These tourists are keen to experience the poetry of the earthy life in rural India, of being in touch with nature and of spending a couple of days with people who live by modest means through simple farming. Grassroutes is a responsible rural tourism movement that is building a network of village tourism destinations across India, wherein the tourism model is owned, managed and run by local village communities. Grassroutes has made it possible for people to get into such villages and realize the true beauty of rural India. Their idea is to get communities to connect. The revenue generated through tourists trips is used to supplement the income of the villagers – and more importantly, encouraging and enabling them to stay back and continue with their lifestyle instead of heading to the city to look for work. According to Grassroutes, the poor and marginalized do not need charity or sympathy — they need opportunities to provide for themselves. And Grassroutes’ mission is to provide them with precisely those opportunities, while also providing urban dwellers a chance to experience something unique and special.

Grassroutes’ vision entails the conservation and promotion of local lifestyles, knowledge systems, environments, economies and traditions by enabling and empowering local communities to access sustainable opportunities. Grassroutes recognizes that lack of access to opportunities is one of the greatest challenges facing rural India. And this in turn leads to exploitation of already over-stretched natural resources, migration to larger towns and cities, which in turn leads to congestion in those urban centres. At a more intangible level, this also results in erosion of local culture, traditions, lifestyles and sense of community. The Grassroutes model has three key aspects to it: (1) facilitating the development of the village as a tourism destination (2) marketing and product development of tourism in the village and (3) quality control and monitoring of tourism in the village.

Grassroutes selected responsible rural tourism as a means of creating sustainable opportunities keeping in mind the fact that tourism is one industry that represents the greatest multiplier effect in economic development. Tourism also provides a platform for interaction that facilitates cultural osmosis and exchange of thought and understanding. These factors, coupled with the fact that entry costs are relatively low, make responsible tourism a very attractive opportunity for social entrepreneurs looking to engage in sustainable development. Historically, tourism has also been the greatest exploiter of local communities and responsible rural tourism is a model that reverses that trend. Responsible rural tourism places the local community at the epicentre of the tourists’ journey while also giving a great experience to the tourist, thereby mitigating the down-side of tourism. The ultimate aspiration of Grassroutes is to create sustainable opportunities in rural India which would give local communities the impetus needed to maintain and celebrate their unique way of life, leading to conservation of local lifestyles, traditions, knowledge systems, biodiversities and local economies.

For more information please visit http://grassroutes.co.in or drop them a note in the comment box below.

[Disclosure: HPA is assisting Grassroutes through mentoring and advisory on strategy and general management issues]

Posted in Economics, Environment, Society | Tagged: , , | Leave a Comment »

Bill Gates on energy: Innovating to zero!

Posted by Hemant Puthli on February 24, 2010

(source: TED)

At TED2010, Bill Gates unveils his vision for the world’s energy future, describing the need for “miracles” to avoid planetary catastrophe and explaining why he’s backing a dramatically different type of nuclear reactor.

The necessary goal? Zero carbon emissions globally by 2050.

Posted in Environment, Strategy, Technology | Tagged: , , , | Leave a Comment »

HPA Perspective on Sustainability: FAQs – 3

Posted by Hemant Puthli on February 1, 2010

This is the third in a series of 6 posts on our perspective on sustainability, and deals with the notion of ‘Common Good’ in contrast to ‘Self-Interest’, and why the pursuit of the Common Good leads to better sustainability. Our first post focused on our definition of sustainability while the second went into details on what exactly we mean by ’social relevance’, ‘environmental responsiveness’ and ‘economic viability’.

Why should anyone want to focus on the so-called ‘Common Good’? What is wrong with plain old ‘Self-interest’? Is one approach sustainable and not the other?

Interesting question, because it helps get to the very root of the matter. Self-interest is a very interesting principle. It is the most natural, the most Darwinian if you like, principle that you see in nature. Seen in the context of humans, it has the potential to evolve from its more primitive and instinctive version i.e., seeking to derive benefit to self by directly accessing value, to a more mature and rational version i.e., seeking to derive benefit to self through value returned by contribution to the ecosystem around self. Animals are not sapient beings and cannot possibly behave in a manner that reflects the latter version, but humans have an opportunity to transcend instinct, act rationally and move towards a better world. In its more evolved form, the principle of Self-interest becomes synonymous with the principle of Common Good – so it is no different, in essence. Do bear in mind that nowhere have we touched upon the concept of charity or philanthropy. Self-interest alone is good enough and will support sustainability, provided it sublimates into its more evolved form. This line of thinking is consistent with age-old homilies such as: ‘You reap what you sow’ or ‘As you give, so you get’ or ‘What goes around comes around’, which are simplified versions of similar thoughts.

In order to test whether a strategy or policy or an approach or a principle, let’s call it X, is sustainable, one may simply ask the question: ‘If everyone were to follow or practise X would it lead to a more prosperous, harmonious and better world?’ and if the answer is in the affirmative, then we may conclude that X is a sustainable idea. While on old aphorisms here’s another adage that resonates with this test: ‘Do unto others as you would have others do unto you’. If everyone were to act in the interest of common good it is likely to result in a feeling of abundance in the long run, whereas if everyone acted out of primitive self-interest it is likely to result in a feeling of scarcity, given the same amount of wealth in the system.


Sustainability Continuum


Apply the sustainability test to other impulses such as Greed or Cheating, and verify the results for yourself. Greed is not a sustainable strategy, and neither is Cheating – the global economic crisis bears testimony to that. It is possible that a few have benefited from it in the short run, and we are not passing moral judgement on them here. All we’re saying is that it is not sustainable. Again, let’s be clear that this is about the plain and simple economics of longevity, not about morality or religion!

The next post in this series will discuss the challenge of sustainability in a competitive situation and will elaborate upon the difference between partnerships and competitive relationships.

Posted in Economics, Environment, Society, Strategy | Tagged: , , , , | 8 Comments »

Does Your Start-up Need to Grow Up?

Posted by Hemant Puthli on January 21, 2010

Over the last decade or so, the heady blend of technological innovativeness and entrepreneurial drive has resulted in a widespread burgeoning of technology-centric start-ups. This was mostly fueled by quantum leaps in the price/performance of technology products in a climate of de-regulation and liberalization, especially in the telecom industry. At the turn of the century, the spike in Y2K business and the concurrent boom in dot-com opportunism were the most highly visible phenomena that marked this trend. Soon after, the predictable post-Y2K void and the inevitable dot-com bust saw a lot of bankruptcies and sell-outs, and, as one might have expected, very few new launches. A few years since then, however, Web 2.0 — the second wave of web technologies coupled with mobile computing and other trends that have collectively been dubbed ‘social media’ — has brought a groundswell of economic activity around technology-centric start-ups. This has been further spurred on by the success of Facebook and Twitter, which have emerged as role models that many Web 2.0 / social media start-ups emulate. Simultaneously, in the post-Y2K world of global sourcing and off-shore IT and IT enabled services (ITeS), there has been a spate of IT / ITeS start-ups that are all aspiring in some way or other to become the ‘next Infosys’ in their respective markets.

However, not all technology start-ups become mega-corporations (though the reverse may be true: several giants in the technology industry were small boot-strap start-ups in their infancy). Not just that, many don’t even scale up to the mid-market level (defined by, say, annual revenues to the tune of tens of millions of US $ and/or multiple hundreds of employees) and continue to remain at the ‘Small’ end of the ‘Small & Medium Enterprise’ (SME) categorization till they are either acquired by larger and stronger players or are just simply driven out of business. Founders and promoters of such ventures are often puzzled and frustrated by the inability of their start-up, now in its adolescence, to break through seemingly invisible barriers that appear to be limiting its growth, in spite of being in business for several years and having built a respectable brand with a proven track record. What they don’t realize is that a lot of the answers to their conundrum lie within the organization itself and in the mindset of the leaders that define and propagate its culture. In many cases, promoters get rid of the problem altogether by selling off the business, but the organization continues to carry the seeds of the problem which then poses a challenge to the new owner. In any case, the inability to grow beyond the invisible barrier continues to be a confounding mystery. Why does this happen? Quite simply, they have started-up and they have grown but they haven’t grown up. Let’s take a deeper and harder look under the hood and try and understand the anatomy of an average start-up culture.

The “Forever Young” mindset has everybody “Living In The Past”

First, let’s focus on the main malaise that afflicts most start-ups, illustrated by the following near-verbatim quote from a recent interview of Facebook’s Co-founder CEO & President, 26 year-old Mark Zuckerberg: “It is really important to always keep a beginner’s mind and think what we would do if we were starting the company now”. This may have been relevant in the context of Zuckerberg’s responses to questions he was being asked in that interview, but it’s a pleonasm to say that every start-up must have a “beginner’s mind”. The more important question is: must they always keep it? Common sense suggests that as a start-up grows it should develop the “beginner’s mind” further and move on to the next stage in its growth, which usually calls for a shift in mindset. It is always a good thing to go back and revisit the time and the space where the “beginner’s mind” was nurtured, but it would be a big mistake to continue to live in that mental space-time. Like humans, start-ups must learn to leave their childhood and adolescence behind as they start to deal with the complexities of corporate adulthood, if they want to grow beyond a point. (Even for humans who seek personal growth, reminiscence of halcyon days as teenagers does not constitute a vision for the future.) Utterances like the one above by Zuckerberg, pulled out of context, acquire their own life as viral memes of start-up wisdom in the highly impressionable social cyberspace, because they resonate very well with the “Forever Young” sentiment of entrepreneurs who simply don’t want to grow up. On the other hand, entrepreneurs who show a hunger for evolution and who are only too eager to embark on a journey towards maturity and sophistication, at the personal as well as the business level, are more likely to make that very important transition through which they will learn to take on and live out a C-level role on par with leaders of other industry majors.

The myth of the “Hands-on CxO” — portrait of the technician as a businessman

In many ways, the “Hands-on CxO” is a corollary of the “Forever Young” mindset. Beyond doubt, at start-up stage it is crucial for CxOs to be highly hands-on, roll up their sleeves and be exemplars of the ‘Do It Yourself’ (DIY) culture. But at some point along the road to growth and maturity, the business leader needs to grow up and actually become a CEO instead of behaving like an overgrown program manager or a sales rep, just as the technology leader needs to grow up and actually become a CTO instead of behaving like an overgrown code-cutter. That journey is as much a personal metamorphosis for the concerned leader as it is for the organization as a whole. Key focus areas for ‘growing up’, in this context, include learning to appreciate the importance of strategy and tactics on the one hand and structure and process on the other, learning to let go of preoccupations with production and delivery issues, and learning to delegate large chunks of the day-to-day operational routine to other team members (who in all likelihood are only too eager to step up and take charge). Not only does delegation release precious bandwidth of key leaders so that they can focus on understanding and embracing their new responsibilities as C-level executives, but also, delegation provides growth opportunities to the team members who get work assigned to them that they were not doing before. This kind of role transformation represents a major career shift for leaders of a start-up and many who aren’t quite ready for that shift tend to resist it with all they’ve got — they would insist on continuing to be hands-on / DIY specialists and would either refuse to delegate or agree to delegate but compulsively continue to micro-manage through remote control. This is partly because they love working on the technology too much, partly because they loathe and fear their new (‘management’) responsibilities too much, partly because they fear losing control over the start-up’s core technical competencies (and risk being challenged by internal upstarts who might grab the opportunity to get a better handle on the secret sauce) and partly because they fear losing touch with technology per se over the years (which would be a handicap should they have to go back to industry for a job, in case the start-up fails).

Cultivating a culture of gods and rock-stars may be good but could also erode value

In almost every technology start-up, there’s a small group of ‘gurus’ who are revered as the gods of that particular domain. The Hands-on CEO and the Hands-on CTO are at the apex of the hierarchy but others in this coterie are almost equally powerful. Younger team members and fresh recruits who show a lot of promise are encouraged to earn ‘rock-star’ status through their first few achievements, and are then invited to join this elite clique. The symbiosis is quite clearly understood but always tacit, never overtly spoken about — the gods preen themselves, drawing on the idolatry of the rock-stars, while the rock-stars enjoy being mollycoddled as special employees and gloat over the privilege of on-line and off-line proximity and access bestowed upon them by the gods. This caucus of gods and rock-starts drives the start-up’s agenda and scripts its future. They have the power to lift the start-up to great heights, as also to bring it down with a crash. They determine what platforms, what tools and what methodologies the firm will use, what they will create (or won’t) and what kind of work they will do (or won’t), who they will partner with and how they will go to market. They shape the talent acquisition strategy and process. It doesn’t stop there, in many cases: they also go on to influence (if not directly determine) strategic and tactical choices dealing with which business opportunities in which markets to chase and how to play to win. The power acquired by this core group could result in several side-effects that have the potential to subvert growth and end up hurting the start-up. For example, it could give birth to cultural xenophobia against lateral hires from the industry, especially if the new entrants also have stellar resumes and come highly recommended. It could trigger a ‘not invented here’ syndrome against new tools, methods, platforms and even new ways of thinking about the business. It could lead to a clinging-on to technologies or methodologies or ideas (or even operating locations and lifestyles) in which the caucus has deep emotional investments, but which are not aligned to market imperatives or do not support growth targets.

‘My Way or the Highway’ could lead to a dead-end either way

The most difficult challenges that a start-up faces in dealing with the winds of change brought by growth and scale, is the letting-go of points of control and the stepping-away from the comfort zones of the past. Growth and expansion usually involve the inorganic inclusion of new people, new ideas, new tools and new methods. Whether it is parting with equity to a new investor (or a new senior recruit) or having to bring in external talent (that internal old-timers may see as a threat) or having to re-shape the organization (resulting in a redefinition of power centers and personal alignments), start-ups must learn to open their minds and their hearts to change. Rejecting or strongly resisting change can mean stagnancy which eventually leads to failure. On the other hand, embracing change may not always guarantee results and in any case, change is never easy. That said, it is historically evident that start-ups that successfully break through the invisible barriers to growth are the ones whose leaders, gods and rock-stars have seen the need to change well ahead of time and have been pro-active in anticipating and meeting that change, thereby opening themselves up to the opportunities that come with maturity.

Posted in Organization, Strategy | Tagged: , , , , , , | 3 Comments »