Shyamsunder Panchavati

Shyamsunder Panchavati
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Wednesday, January 21, 2015

Big fish eat little fish and so on ad infinitum. (About B-Schools and MBA) 01-21

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Big fish eat little fish and so on ad infinitum. (About B-Schools and MBA)





Today’s dynamic, technology-infused world offers limitless opportunities for bringing new ideas to your customers, whether in a for-profit business, non-profit entity or government agency. But even the most forward-thinking leaders with clear strategic visions can fail to see their visions executed successfully. To achieve desired organizational and team results, strategy and execution must be aligned, yet organizations often struggle to effectively identify, resource and manage the project-based work that comprises the strategy.

These industries look up to the B-Schools to provide human resources that could eventually be trained to excel in envisioning the future technological needs of the organization and plan the execution of the same.

How far the present B-Schools are equipped to deliver the same….???

Well the big ones, international ones and the globally relevant ones are to certain extent able to do it. As for others, it is still a far cry, with regard to “the needs and delivery parameters”. And this inability impacts the quantum and quality of intake, student career, and the profitability of the institutions.

When we examine the actual effects of business schools on the two outcomes of most relevance and importance, the careers of their graduates and the knowledge they produce, the picture is reasonably bleak. There is little evidence that mastery of the knowledge acquired in business schools enhances people's careers, or that even attaining the MBA credential itself has much effect on graduates' salaries or career attainment. Similarly, the impact of business school research, judged by a number of different criteria, appears to be quite small, and this is true even when research produced by business school professors is compared with business research conducted by writers not in business schools.

Even in this bleak situation, some of the big schools who have earned an impeccable reputation over a period of time due to various factors garner all the quality admissions and big buck campus recruitments. This is at the expense of numerous small Institutions, which cannot afford the quality in various aspects that these big institutions have. This situation is known as …..

Big fish eat little fish and so on ad infinitum.

Is your B-School in this situation?

Do you feel throttled by the brand image of the big schools?

Are they walking away with the admissions and recruitments from your area?

You can come out of this situation. Yes you can

You too can become an institution with a reputation to reckon with, only if you can build a Brand Equity that takes you everywhere.

How do you build Brand Equity?

You money can buy you things like state of Art Infrastructure. Technically superior labs, high quality course content and even highly qualified teaching staff. You may also be getting local students strength based on the local reputation of the founders. But all this does not amount to brand image. You are having a cozy piggy ride on founding family’s reputation, which again is limited to a part of the district, a district or at the most a state or province of the country. Such dependence is a dangerous thing because your reputation will also have a downward and upward swing in accordance with the fluctuations in the reputation of the founding family. The fluctuations are more, if the family is in politics. It is best advised to push the founder name to back ground and try to gradually bring the institution to foreground and reach a stage when the founder is identified by the reputation of the institution.

A good example of this is the well known Harvard University

Almost four hundred years ago, when one John Harvard established a University and gave it his family name, people might have initially remembered the University by its founder’s family name. But today, while Harvard University is almost a household name throughout the world, not many outside the United States (or even in United States) know about the existence of one John Harvard and his statue inside the University Campus.
Even Harvard Business School, which was founded more than Two hundred years ago, drew its reputation from that of the University and then built its own in the subsequent years. These institutions worked so hard to build their reputation that they automatically sent the reputation of the founders into obliviousness. It does not mean that it takes that many years to build brand equity. Institutions like Insead & IESE and a few others which have their origin outside USA have built their brand equity in much shorter time.

You need to build a reputation and brand image independent of the founder and it should be so strong that even a loss in reputation for the founders should leave the brand image of the institution unscathed. Building brand equity is a painful process and It needs to be built brick by brick. You are supposed to have a brand image, when you stop talking about your institution and others start talking even when you are not around.

Collaborations

People think they can instantly build brand by collaborating with an institution or a organization having brand. Any organization that collaborates with an institution that doesn’t have a brand image does so for its self gains. Such institutions may not actually have the brand power that they actually pretend to have. You may ultimately lose out on both your money and the reputation and by the time you realize it, you would have wasted valuable time and money. Quality collaborations do not materialize unless the collaborators have the confidence that the institution will implement the required norms strictly and invest in quality of admissions, imparting, content, workshops, and case studies.

Recognition

Recognition by Government institutions (like AICTE in India) is good and mandatory in some countries, but it does not give you any mileage because almost all the institutions in the region/country have it. Alignment if any has to be with an institution that is a global brand.

Campus Recruitment:

100% campus recruitment does not mean the Institution has a brand image. There are factors that determine the brand factor in Campus recruitment like the reputation of the recruiter. The package offered, the job title, the job profile. How long the people selected stick with the company. The professional and the financial growth chart of the students that get recruited in the next three to five years. These are some of the parameters on which the institutions are ranked by most the globally relevant ranking agencies. Higher the ranking better is the visibility for the Institution.

Learning and Teaching


There are certain issues that can help us understand the limited effects of MBA education. The first is that many programs operate on the basis of some incorrect assumptions about learning, thereby doing things that contribute to poorer learning outcomes. One such assumption is that good teaching equals more learning, and that good teaching is best assessed by the students in end-of-quarter (or mid-quarter) evaluations. Partly in response to the ratings game and the accompanying emphasis on student satisfaction with MBA programs, and partly because for many business schools, attracting students is an issue, most schools have made courses more "student friendly." Students now routinely expect summaries of course readings and materials. For instance, at Stanford and many other business schools, it is now customary to pass out copies of overheads at the end of each class session summarizing the main points and ideas of the class, in response to student demands for "structure" and "take-aways."

The problem is that when students are relieved of any sense of responsibility for their learning and much involvement in the learning process, the evidence is that they learn much less. Tough (1982), studying self-reported learning by adults, found that few learning experiences occurred in groups with a teacher. Armstrong maintained that "when teachers direct and evaluate learning, students feel less responsibility" (1995: 102). Interestingly, the evidence shows there is little relationship between students' satisfaction with their teachers and what they learn (Attiyeh & Lumsden, 1972), calling into question the emphasis on course ratings. Teaching and learning are fundamentally different in their orientations: "The focus on teaching incorporates an input orientation. A focus on learning requires an output orientation" (Boyatzis, Cowen, & Kolb, 1995a: 9).

The second incorrect assumption is that external incentives are important and that by grading students' performance, the motivation problems previously enumerated can be overcome, either by providing positive recognition or by threatening academic difficulty. There are two problems with this assumption. First, as already noted, few sanctions are actually administered for poor performance in classes. Moreover, although schools can offer various forms of recognition for academic achievement, in the business schools, unlike law schools, where class standing has a real effect on job prospects, there is little evidence that course grades or class standing, even when available, are given much weight by employers in their applicant screening. Second, as reviewed extensively by Kohn (1993), the evidence, particularly in education, is that the use of external incentives, such as grading, impedes, rather than enhances, learning outcomes.

The final issue is the method of instruction. Some schools lecture, others teach by the case method, some use a combination. But in relatively few instances in established business schools is there much clinical training or learning by doing--experiential learning where "concrete experience is the basis for observation and reflection" (Kolb, 1976: 21). Students learn to talk about business, but it is not clear they learn business. "Unfortunately you cannot replicate true managing in the classroom. The case study is a case in point: Students with little or no management experience are presented with 20 pages on a company they do not know and told to pronounce on its strategy the next day" (Mintzberg & Lampel, 2001: 244). As Bailey and Ford argued, although a scientific approach may be useful for the study of management, it is not at all clear that it helps in teaching management: "The practice of management is best taught as a craft, rich in lessons derived from experience and oriented toward taking and responding to action" (1996: 9). But as Leavitt noted, "business schools have been designed without practice fields" (1989: 40).

Curriculum:

Curriculum is the most important aspect in building a B-School. How close your curriculum is to the industrial needs, decides how much of quality campus recruitment you get which again decides the quantum and quality of admissions you get. You may not have the resources to design an industry friendly curriculum and modify it frequently as per the changing market situations. Following a university curriculum may leave you behind in the race as these curricula are not updated as frequently as required. Aligning with people or institutions that have mastered the dynamics of designing the curriculum that not only meets the current needs of the industry, but also identifies future industry needs is beneficial for an Institution.

Curriculum is not only about the topics to be imparted but it more importantly about the intensity & depth with which different topics have to be imparted. An ideal curriculum should also detail the methodology to be adopted like the discourse, case study, Investigative, exploratory methods and various auxiliary methods of imparting which are different and specific for each subject. The present trend is of course the Data science. Dynamic Curricula are now either embedding this subject in to their streams with various intensities or offering a certificate or diploma in Business Analytics. Next Year this will change. Already we are seeing more industry interest in Artificial Intelligence (AI), Wearable internet (IOT) and many others.  You need to be sensitive to the changing needs of the industry from time to time.

A dynamic curriculum not only helps you get the best quality of students, an intellectual omnibus helps you spread the geographic reach of the institution. A universally applicable curriculum attracts the best among the corporates from diverse domains, which in turn attracts the best among the students. While it is correct that such an alignment is a costly affair in the initial stages, long term benefits and financial gains grossly over-weigh & justify the initial investments.

Streams of learning:

Streams of learning could be one step ahead and one step beyond the normally considered streams of Management Education. One of the important reasons for the world class B-Schools being world class is their ability to create uniqueness in the streams of management learning they are able to offer. For example, if you are offering Finance streams you could go one step ahead and offer specialization in finance related to Sustainability, Social Business, Crowd Sourcing, Inclusive Business and so many other unique fields. Similarly Marketing can have unique specialization like Digital Marketing, Social Media Marketing, Cloud Storage/Date Storage marketing, similarly there are unique streams in other domains HR, Supply Chain, Production Processes and other. In fact a school can have two levels of streams. The primary or the specialized one which would help in building the brand equity and the secondary ones that can bring in supplementary income to Institution.

Finally you need to ask yourself the question, does my curriculum just cater to business education or it also has an end user empathy factor, which could eventually lead to design innovation. The simple question is…..

Are you inculcating entrepreneurship in to your students or are just preparing them for entry level jobs?????

The Faculty

The general misconception among the institutions is that, imparting standards can be improved by recruiting faculty having a Ph.D.  Nothing is more removed from truth than that. It may be true with other domains but not with Management domain. Classroom is just one among the many arenas of learning for the management student. A faculty who has experienced learning, in all the arenas will only be able to impart to the expected standards. It is essential that the faculty has strong industry experience to support his academic credentials. It doesn’t matter if the person doesn’t have a Ph.D.  At least the head of department for each subject should have exposure to these diverse arenas.

Guest Faculty

It is a well known fact that constraints of budget often come in the way of or hiring or engaging quality faculty. However engaging visiting faculty works out much economical for the institution. A beginning can be made by inviting renowned in each domain in a semester. The schools do invite people from industry for guest lectures, but the purpose is to garner some campus recruitments from them. The management more often than not has to be convinced about the tangible returns in terms of recruitments before they agree to spend on these programs.

The healthy practice would be to delink the recruitment process from the imparting process. Only academicians with entrepreneurial background, or entrepreneurs doing at least occasional teaching should be engaged for this purpose. These people are more current with modern academics and student comprehension levels. Other entrepreneurs usually have the habit of narrating their past experiences which may or may not be relevant to the current times. There may not be much of learning for the students from these lectures.


The Arenas of learning

The arenas of learning extend far beyond the classroom & the curriculum. The other arenas include the Entrepreneurship labs, incubators, hands on working experience at various organizations as diverse as possible, collaborating on management research projects with organization, field study of the customer behavioral pattern towards the products and the related segment and most importantly case study related to the success or failure of an organizations in various domains. Working for projects in collaboration with governmental & non-governmental organizations for formulation of domestic and international policies, projects and programs also helps considerably in improving the management capabilities of the students.
It may not be possible to create all the arenas of learning for some schools. However the endeavor should be to have as many arenas as possible and make learning as diverse and close to reality as possible.

Marketing and the promotion of the institution.

All the factors mentioned above can be useful in creating an Avant Garde institution, but it cannot make it a sustainable proposition. Spreading the good word about the institution is necessary, which is not easy. Creating visibility locally, nationally and globally is required. First and foremost thing is to position your institution appropriately in terms of the competition. Then you have to design need based organization specific marketing and promotional policies. You need have specific marketing policies for physical, virtual, social media, inbound & outbound marketing. You need to create effective customer reach & conversion channels and funnels.

For all these you need to engage an expert, place complete trust in him, and follow his advice in terms of budget and policies. Most importantly you need to be patient and give sufficient time for the policies to bear fruit. Initially even small gains should be celebrated as big achievement, and big achievement should be treated as a stepping stone for a bigger ones to follow. This should be considered as a continuous process and every success should make the institution hungry and greedy for more.

I know there is much more to creating a great institution than what I have written. My knowledge is this domain has come mainly because of the opportunity I had of contributing to the research of the great institutions like Mckinsey & Co (From 2011) Harvard Business Review (From 2012), MIT (from 2013) and some other organizations. Studying about and exploring the working of great institutions like Kellogg, Wharton, Stanford and others has also helped. I have also gained considerable knowledge by doing online courses from IESE Spain, Harvard and others. In spite of all these I recognize that there is tremendous scope for adding to the content and improvement of the existing content. I request my friends to feel free to contribute their insights to this topic.

Best wishes,

Shyam

Wednesday, October 22, 2014

Diwali Greetings 10-22

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Thursday, September 4, 2014

Teacher's Day 2014

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Feel greatly blessed on this Teacher's day,for being able to positively impact the student's life albeit in a small way.. 

A day to profusely thank the almighty for creating a clan of teachers and more importantly for including me in that clan.

This probably is the reason and inclination, why sometimes we agree to work for less evolved management and directors.

I have the unique of privilege of having students and followers who are intellectually more evolved than me.

Thanks for accepting me and my views

Humble Pranaam

Shyam





Friday, August 29, 2014

Kriti gets candid, Latest photo shoot by Manisha Panchawati 08-29






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Her message

"Hi guys, i am back with a latest photo shoot, which came out really well. All credits to my photographer Manisha. She had shown me so gorgeously in 6 different looks. Had to thank all the makeup persons and the lighting crew, who made me look great. Had a very good time working with Manisha. Looking forward to work with her again. Watch & Enjoy this photo shoot. And share your views with me".


Tuesday, August 19, 2014

“Espirit De Corps” The strategic Driver in Project Management 08-20



“Espirit De Corps” The strategic Driver in Project Management





How the idea evolved into a concept??


I was invited by the Project Management Institute (Pearl City chapter) to be the guest speaker for one of their events on 30 May 2014 held at CMC Hyderabad.


The self-imposed challenge before me was to be innovative and deliver something new to the young project managers and if possible engage them in expanding the idea into workable adjuvant and driver in project management. Changing the bottle or the wine was never an option, besides I thought that the intelligent and creative audience of project managers associated with all the major IT entities like Microsoft, Infosys, TCS, and others needed something more original than that.


I took one week off from my day job to work on this mission of creating and developing on a new concept that would evolve into a strategic driver in Project Management.


Luckily and thankfully on the first day itself the idea of “Espirit De Corps” to mind and gradually over a period of three days the idea evolved and took shape of concept related to project management. I developed this in to a speech and related power point presentation.


Espirit De Corps…. The concept


It is the process of aligning the personal needs and values of the employees or the team members with the organization culture. The feeling of self actualization should emanate from the work the employees do for the organization.according to Barrett: personal alignment, structural alignment, values alignment and mission alignment are important for an organization. Failure to achieve alignment results in what he calls cultural entropy, This is the essence of Espirit De Corps (EDC) is the facilitation of alignments and the reversal of cultural entropy.


There are great organization in India like the Tata, Godrez, Wipro, and Japnese organizations like Toyota, Mitsui & Co and others that are practicing EDC in letter and spirit.


These are the organizations that have created a flow of alignment process. They have aligned the personal needs and values to the structure of the organization and further aligned these with the mission statement of the organization.


Here we relate the Espirit de corps to the seven stages of development of the organization.







These are also the gradual stages of evolution in human behaviour where it begins with survival and reaches a stage where an individual thinks of service to humanity and the planet. If an organization can synchronize its own evolution to the evolution of its employees through the above stages, EDC can be achieved.


How does EDC apply to the Project Management?


There used to be saying, I used to hear very frequently in my younger days. “God could not be everywhere that is why he created mothers” now extending this ancient wisdom a little further we can say that since Children needed a value added professional presence, he created fathers.


In the professional world, project managers are mothers and the product managers are fathers. While the project managers transform a collection of bits and bytes into live products. It is the product managers who bestow values on the product and makes it acceptable to the people throughout its life cycle.


Together they make a great combination and keep the wheels of the industry moving.


We are of course discussing Project Management and the Project Manager. A Project Manager whether he is aligned to a project or to the PMO.


A PM has to continuously and simultaneously monitor diverse and different processes keeping the systems intact. He has to keep in mind the essential drivers, set his parameters and indicators.


All these he needs to do keeping in mind the three Damocles swords hanging over his head.


They are Performance, Costs and Schedules. One small miss somewhere in any of these areas is enough to take the project to its doom.


For this he needs to depend heavily on various resources and supply chains. Not all of which are in his hands. These are managed by people located at different and distant places.


Indirect Leadership


When you involve people you involve diverse cultures mind sets, & mind tattoos. Sailing smoothly amidst these daily tempests in tea cups is a tough job. Many times the project is divided diversified and is multi locational. This results in some (or even most) of your team members being located at places far away from that of yours. Here is where your qualities of indirect leadership come into effect. You are not present there but you need to make your presence felt in every location and in the hearts and the minds of every team member.


Two types of people


You generally come across two types of people. People who work professionally work mechanically just enough to ensure their survival. But people who are engaged emotionally are the ones who are the go beyond types, these are your crises men “The Man Fridays” .


Crisis and projects are strange bedfellows. There is no symbiosis ever, but never the less they coexist. Overrun though most hated is also the most commonly used word. This is where your man Friday’s come into picture. These people can work hard set an example and also lift the tempo of the team morale and help in minimizing the overruns.


Hence your absolute necessity is the people who can walk the extra mile, and then another mile.


And here is where you need ESPIRIT DE CORPS


EDC is all about creating an emotional bind, a feeling of ownership, a sense of belonging towards the organization, its values, project and the people. It is not just adding extra hands to you, but it is more than that. It is like adding extra fingers to your hands. The emotional transition from being extra hands to extra fingers to your own hands is possible with EDC.


Can the Project Manager induce the spirit of EDC in his team?


May be to a very small extent yes? But bringing total transformation is not possible at the manager level.


Can you train people for this? Absolutely not


A child doesn't need to be trained to love his mother, does he?


It is inborn and comes out at the right moment…


Similarly EDC is there in every individual, it needs to be ignited, and it has to be done at the organization level. The project manager can only translate the existing values in his work schedule so that they transcend down to all levels and get embedded in their work culture.


But even he cannot create values. The values need to be there in the organization. Managers can only take it forward. The intensity of course differs from person to person.


There are certain things the project manager needs to do to help the inculcation of EDC by various processes which include an honest evaluation of the team members in the areas of


Strengths and weaknesses


Affinities & disaffinities


Inhibitions & articulations


The Project Manager can also use the social media to create a close knit private community where the team members unplug themselves share their problems, and find ways within the community to resolve the same. The project manager should also participate in the discussion as a member of the community, not as a team leader. This helps to create oneness and a sense of belonging in the team and makes every member a man Friday or a women Friday. Social media is just one method; there are other equally good methods to transform the team into a cohesive unit. The Project Manager can choose the one that suits the best in terms of applicability in accordance with the geographic and demographic requirements & people culture.


These are certain things the project manager can do to retain the spirit of EDC such as


Identify and reduce organizational barriers to strategic execution


Formulate approaches for improving alignment between the organization and the team's culture, structure, strategy, and metrics. Realigning and redefining of metrics. The project manager needs to keep the goal post moving to facilitate the achievement of objectives by the team members.


Recognize, communicate, and influence project, program, and portfolio decisions and deliverables

Build a stronger project-based organization that consistently delivers high performance.

Improve the ability of members to impact results beyond the project level. Possible only with emotional engagement.

.

What should the organizations do?


It is important for the organizations to understand that the philosophy is not merely a few guidelines, ideas, rules, or techniques which you can tag on to the end of whatever you do now.


It involves a thorough, radical, rethink – a complete reversal of attitudes towards some strategies, modes of behaviour and beliefs to which you have become accustomed to and conditioned over the years. If you do not accept the fact that we are talking of a deep, fundamental change then it will not happen.


This change cannot happen overnight. But there must be a constant, consistent movement in the right direction: every day there must be a move closer to total involvement in ever improving quality of all systems, processes and activities within the organisation.


Finally I would like to state that, this is not the be all and end all in terms Espirit De Corps. There is lot more to it than what I have written. I request my friends in Project Management to add their views and help to improve this article.


I feel, together we can not only improve the quality of this article, we can also help in the evolution of this article in to a module for PMP certification.This is my ultimate goal.


Best Wishes,


Shyam


Sunday, August 17, 2014

"Que Sera Sera” attitude does not work in Business….. 08-17


THIS ARTICLE IS  BASED ON MY GUEST LECTURE AT IIT KHARAGPUR SCHOOL OF MANAGEMENT (VGsom)


THIS ARTICLE IS BASED ON MY GUEST LECTURE AT IIT KHARAGPUR SCHOOL OF MANAGEMENT (VGsom)

“Que Sera Sera” is great in life but doesn’t work in Business…..

You need to have a robust Business Model to back your resolve……

Creating a Sustainable Business Model………..

I was invited by the Indian Institute of Technology (IIT) Kharagpur to deliver a Guest Lecture at their school of management (VGsom) on 7th Agust 2014. For my friends not familiar with Indian educational institutions, let me explain, IIT in India is what MIT is to USA and the rest of the world.

I enjoyed unbridled hospitality at their Technical Guest House where I was lodged. Awesomeness was omnipresent in the sprawling two thousand plus acre campus with picturesque green surroundings. Add to this was the continuous buzz of the students moving around busily in their bicycles, speaking in all the different languages and dialects India has, this kept the atmosphere live and vibrant. It gave a feeling of being in a cosmopolitan cosmos, of a different kind.

A couple of hours are not enough to gauge the quality of imparting at the school, but it was surely enough to determine the quality of the warmth of the students and the faculty, which definitely was Avant Garde.

Coming to the topic “Creating a Sustainable Business Model”…..

Let us first understand what a Business Model is?  

Wikipedia defines it thus….

A business model describes the rationale of how an organization creates, delivers, and captures value…The process of business model construction is part of business strategy.

Why do we need a business model?

A business enterprise without a business model is a like ship without a rudder. It is directionless, it can get struck midstream. It may sometime even reach the shore, but it may be one of the many possibilities. With a definite business model reaching shore is a definite certainty.

A well defined business model navigates the business enterprise in the desired direction. A business model in other words sows the seed of aspiration for a startup. Then it also creates suitable conditions for germination and proper growth. And finally it ensures the fructification of the aspiration of the entrepreneur. 

Can a service industry have a business model? Can an educational have a business model?

Any type of business can have business model. In fact every industry in any segment should have well defined business model. In fact even a country should have business model to achieve growth in industrial and economic segments.

India as a Viable and Sustainable Business Model…

Let us take the example of India. Often the phenomenal growth of this country during the past decade and half is credited to the reforms brought in by the Narsimha Rao – Manmohan Singh team in the early nineties. While it certainly opened the doors for foreign investment in different forms and sectors, the change in the perspective of the people in United States and Europe about India being a country of Snake charmers and Bullock carts, to that of country of abounding vibrant human capital, was brought about by a set of Indians who went to United States on shoes string budgets established themselves, established their businesses and contributed hugely to the growth American economy. These technocrats are known as early adapters. This are the people who created confidence in the investors in USA & Europe and  helped create India as  a viable & sustainable business model. Read about them here.

Educational Institutions and the Business Model

Great educational institutional institutions have their own distinct Business Models that is reflected in intake of students, imparting methodology, their location and the type and quality of Faculty they hire. Each institution shows a distinct bias towards a particular area.

Harvard Business School uses the case study methodology for imparting.

Wharton school of Business uses the data driven methodology.

 Chicago Booth school is very possessive and obsessive about its faculty and culture of imparting. It flies its faculty from Chicago school to its London & Hongkong schools.

And so are other major schools like Tuck, Kellogg’s, Haas, Columbia, Stanford and other business schools, each one of them has a separate and distinct business model.

Points to ponder before constructing a Business Model

Before a business model is constructed, it is important to consider the following questions.
1.      Will the business model address the special needs the customers have?

2.      What are the activities the organization needs to undertake to meet these special needs of the customers?

3.      What are the unique way the various and diverse activities could be linked to create a seamless work flow?

4.       How best the delegation of the work responsibilities can be planned based on the individual skills and collectively how a novel governance procedure can be evolved?

5.      How best a value for the stake holder can be created?

6.      What are the revenue models that can supplement the business model?

The Business Model designed should address the above issues.


The Nine blocks of the business model




Read more about the 9 Blocks here.

Customer Segment CS, Value Proposition VP, Channels CH, Customer Relationship C R , Revenue Streams RS, Key Resources KR, Key Activities KA , Key Partnership KP, Cost Structure CS


View Video

How about the existing organization having a well defined business model?

Even the established organizations need to innovate their business in accordance with times, technology and competition. We can already see some brick & mortar business structures   are either already crumbling or there are strong indications of this happening in near future.

Business model innovation matters to managers, entrepreneurs and academic researchers for several reasons. First, it represents an often underutilized source of future value. Second, competitors might find it more difficult to imitate or replicate an entire novel activity system than a single novel product or process. Since it is often relatively easier to undermine and erode the returns of product or process innovation, innovation at the level of the business model can sometimes translate into a sustainable performance advantage.

Business model innovation can occur in a number of ways:

1. By adding novel activities, for example, through forward or backward integration; we refer to this form of business model innovation as new activity system “content.”

2. By linking activities in novel ways; we refer to this form of business model innovation as new activity system “structure.”

4. By changing one or more parties that perform any of the activities; we refer to this form of business model innovation as new activity system “governance.”

5. Content, structure and governance are the three design elements that characterize a company’s business model.

The Challenge of Change 

Typically companies devote the majority of their resources to optimizing current business models especially by applying and improving incrementally on existing capabilities. This is because business models are ultimately based on a common understanding among individuals—company managers, employees and investors—of what business they are in and how they create value. Shifting these mental models to evolve business models remains a powerful barrier to innovation.

But, just because business model innovation requires a mental leap and requires potentially painful shifts within a company doesn’t mean it isn’t possible or necessary. In fact, when it comes to survival, some established companies will shift their models, and will do so quickly.

The largest companies tend not to be the source of new models, but they can help evolve and scale them.

Most business model innovation emerges from companies that design more sustainable models from the start. That said, bigger companies can help to bring these models to maturity. This may occur through acquisition or mutually-beneficial partnerships, or the adoption of new ideas into a given industry.

In addition, large companies are finding creative ways to innovate and experiment with new business models. They are partnering with social entrepreneurs and using a range of tools—impact investing, innovation platforms, in-house venture funds, and dedicated R&D centers—to search for and exploit effective new models.

Although smaller companies often lead the way in business model innovation, we believe bigger companies have a critical role to play in helping to enhance the impact of the most important innovations.

Business model innovation doesn’t happen in a vacuum. 

However urgent our quest for sustainability, new business models can’t just be willed into existence. Instead, we must recognize how any model—sustainable or not—is dependent on surrounding conditions, and that new models are often enabled by, or arise organically from, changes in those conditions.

Looking across the models identified in the report, we see numerous examples where changes in circumstances—an infusion of technology, entry into a new country, a shift in customer demographics and/or preferences, areas where old systems have crumbled—along with the keen insight of the innovators themselves, have been the key to radical shifts in models.


But the implication is not that business leaders and companies should simply stand by and wait for things to happen organically. Disruption frequently catches us off guard and is almost never orderly in its impact, and in a world that is more and more defined by the increasing scope and pace of change, it is more or less inevitable. The key is to increase our individual and collective ability to recognize and respond to— and where necessary, to directly engineer—circumstances that will support new, more sustainable ways of doing business.


Can the business model innovation transform the industries?


The biggest reason for companies to embrace business-model innovation is the threat that current models will ultimately slip or even fail. Examples of business models that have quickly transformed – or even become obsolete – abound across sectors: media (the decline of print), retail (the rise of online shopping and the sharing economy), education (the growth of online degree programs), music (the boom in digital music services such as Spotify and iTunes), telecommunications (the proliferation of smart devices and associated services) and even finance (the creation of peer-to-peer lending).

Many traditional business models that still remain viable today may rely on mispriced resources and other market distortions that make them more competitive than they would otherwise be. As sustainability trends and challenges – including energy and commodity price fluctuation, supply insecurity or demands for transparency – continue to shift the foundations of our current business models, incremental innovation will become less and less effective in enabling companies to adapt and succeed.

The energy industry is one example. Incumbent utilities are facing startups such as Solar Mosaic, which offers an easy-to-use crowd funding investment model enabling small individual investors to fund large commercial solar projects. This type of business model innovation is gaining more attention as it begins to challenge the established position of traditional fossil fuel-based energy producers.

However those who have been creating a business model with the benefit to the society in preference to high profitability have been receiving recognition & rewards from the society and international organization. This has also given them worldwide & and a relatively easy access to funds.

In health care, Narayana Hrudayalaya Hospitals, winner of a Financial Times' Boldness in Business award in 2013, provides a good example. The hospital uses innovative process efficiency, revenue generation, cost structure and financing to make a profit while providing both rich and poor access to vital health care services. The company, along with others such as Aravind Eye Care, is changing the way medical providers in India think about the cost, quality and reach of their services. At Narayana Hrudayalaya, the average open-heart surgery costs less than $2,000, compared to well over $100,000 in the US.

 Business-model innovation catalyzes broader systems change…


According to a 2012 paper from MIT, it's important to innovate in areas where the competition is unable or unwilling to act – and to involve an entire "activity system" in a way they might find it difficult to replicate. The classic example is the Apple iPod, which wouldn't have been the game changer that it was without the iTunes ecosystem. That combination dramatically changed how we acquire, store and listen to music.

To innovate within systems, companies need to be able to see and adapt to shifting market conditions and other changes by identifying trends and engaging stakeholders. Leaders must respond to, but also create, systemic change to build new markets while protecting themselves from any dramatic systems shifts that could present a risk. To do all this, companies must be willing to see beyond the obvious, short-term business case.

According to a 2012 paper from MIT, it's important to innovate in areas where the competition is unable or unwilling to act – and to involve an entire "activity system" in a way they might find it difficult to replicate. The classic example is the Apple iPod, which wouldn't have been the game changer that it was without the iTunes ecosystem. That combination dramatically changed how we acquire, store and listen to music.

To innovate within systems, companies need to be able to see and adapt to shifting market conditions and other changes by identifying trends and engaging stakeholders. Leaders must respond to, but also create, systemic change to build new markets while protecting themselves from any dramatic systems shifts that could present a risk. To do all this, companies must be willing to see beyond the obvious, short-term business case.

Innovative business models are not always a success..


There are many business models created with noble intensions by the high-end professionals that fail. However they remain unsung. Only the success stories make it to the business journals and also become part of the research being conducted by various academic institutions.

In fact failed business models should also form an important part of the case studies. A student of business management or a management professional will have a lot of take aways from these failed ventures. We need to delve into minutia of these businesses; these could provide important data that could  be an important resource of the entrepreneur learning lab. An in-depth study could help in identifying the pitfalls and avoiding them while constructing a successful business model.

One example of the failed business model is that of “Better Place” the electric car venture.


The demise of Better Place provides a cautionary tale that illustrates the need for larger systems change. The electric car venture, based on an innovative battery-swapping technology, sold only 750 cars, while amassing losses of more than $500m. Ultimately, the success of Better Place depended on broader systems changes that never materialized, including tax and/or subsidy support, local government approval in building battery-switching stations and automaker design partnerships.

How much of business model Innovation is real, how much is hype?


An analysis of major innovations within existing corporations in the past decade shows that precious few have been business-model related. And a recent American Management Association study determined that no more than 10% of innovation investment at global companies is focused on developing new business models.

Yet everyone’s talking about it. A 2005 survey by the Economist Intelligence Unit reported that over 50% of executives believe business model innovation will become even more important for success than product or service innovation. A 2008 IBM survey of corporate CEOs echoed these results. Nearly all of the CEOs polled reported the need to adapt their business models; more than two-thirds said that extensive changes were required. And in these tough economic times, some CEOs are already looking to business model innovation to address permanent shifts in their market landscapes.

Senior managers at incumbent companies thus confront a frustrating question: Why is it so difficult to pull off the new growth that business model innovation can bring? Our research suggests two problems. The first is a lack of definition: Very little formal study has been done into the dynamics and processes of business model development. Second, few companies understand their existing business model well enough—the premise behind its development, its natural interdependencies, and its strengths and limitations. So they don’t know when they can leverage their core business and when success requires a new business model.

After tackling these problems with dozens of companies, we have found that new business models often look unattractive to internal and external stakeholders—at the outset. To see past the borders of what is and into the land of the new, companies need a road map.

Unfortunately there is much hype than any real serious business model Innovation. Many a times a change in products or modifications in processes are passed off as business model innovation.

In a BCG and MIT survey of executives and managers, nearly half of the respondents said their companies had changed their business models as a result of sustainability opportunities. However, the majority of innovations we see involve changes in companies' processes and/or products, not underlying business models.

This brings us back to the question we asked in the beginning of this article.

What exactly is a Business Model?






Hope the audience understands the business model as the fundamental structures for how companies create deliver and capture value. Often it is not the product or the service alone that determines the business success, but the entire value structure around it.

Actually there is much, much, much, more to the business model than what can be written within the constraints of an article. I request  the audience to come out with their views perspectives, dissents, disagreements and help in the improvement of this article.

Hope you have enjoyed reading this article.

Best wishes,

Shyam

Case Studies

In studying companies that sustained a high level of performance over many years, we found that more than 80% of them had well-defined and easily understood differentiation at the center of their strategy.

Nike’s differentiation resides in the power of its brand, the company’s relationships with top athletes, and its signature performance-focused product design. Singapore Air’s differentiation comes from its unique ways of providing premium service at a reasonable cost on long-haul business flights. Apple’s differentiation consists of deep capabilities in writing easy-to-use software, the integrated iTunes system, and a simplicity of design and product line (Apple has only about 60 main SKUs).

Some important business models that also addressed sustainability factors worked towards pollution free environment and helped make basic healthcare to poor people.









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