Smart managers don't repeat mistakes

There was a very famous guy called 'T'. Wilson, who really was the eminence grise of the Boeing airplane company for many years. In fact, he was the guy who, in the postwar period, built up the Boeing airplane company.

When I got to know T Wilson -- he was a lot older than I was -- I was lucky enough one day to be having a drink with him. He was the guy who brought the Boeing 707 to the marketplace, which was really the first highly successful commercial jet airplane. Like a lot of other things, the Brits got there first but simply never turned it into a serious business venture. These guys in Boeing did it. But as a result, the demand for the aircraft rose so quickly that they were buying immense volumes of aluminum, which was a major piece of the material for the construction of the aircraft.

I was asking him, when he looked back over his career, what were the most difficult times he'd had in dealing with the investment communities and the analysts of the New York markets. He reminded me of a situation that I'd heard about briefly but didn't really understand.

They were buying such big volumes of aluminum at the time, and the lead time on taking an order and delivering an aircraft was three to four years - depending on the market supply and demand - so prices fluctuated violently. It's very similar to the oil situation today, actually. So you could sell an aircraft and assume a price for aluminum of X dollars per kilo, but by the time you actually came to buy it, it could have changed dramatically, either upward or downward.

T Wilson said to me, "We just had to find a way of managing this risk and getting it under control." He said, "I called the guy who was the chief buyer and said, 'Look, for these reasons, we have to find a way of stabilizing the risks in this program, and we think we need to look at some form of hedging policy.'"

Well, this was in the 1960s. Today, hedging policies are perfectly normal events. We hedge currencies, we hedge material prices, we hedge oil prices; but at that time it was pretty revolutionary. Anyway, this guy understood the basis of it, went out, and was effectively buying aluminum ahead of rates. The market suddenly turned against [Boeing], they lost a ton of money, and they had to go to the market and announce an exceptional loss.

T Wilson, as the chief executive of the company, had to go to all the big institutional investors in New York and explain what had happened. You start off with the investors, then you go to the analysts, and then eventually - because the analysts talk to the press - you have to talk to the press about it.

Eventually, this guy finished talking to the press. He was having lunch with a journalist, and the first thing this journalist said to him was, "I sure was sorry to hear about the loss on your hedging book on aluminum, but I sure as hell hope you fired the son of a bitch who was responsible for it." There was a bit of a pause, and I said to T. Wilson, "Well, what did you say to him?" He said, "I looked this guy straight in the eye and I said to him, `You what? And learn that lesson all over again? For sure as hell I didn't fire the guy.'"

That's a great story that tells you about how management interacts with the guys that have to do the job. It's also a lesson that tells you, in management terms, that you only have to be right 51 percent of the time to be on the right side of the curve. Here was a guy who had stood up and defended a guy who had cost the shareholders and the company an immense amount of money and kept the guy on in the belief that the guy would never, ever make that mistake again.

That always stuck in my mind, when I've had guys working for me who've made some seriously big mistakes. It's very unusual for a high-quality person - and hopefully when you put guys in these positions they are high-quality people-to make the mistake a second time around. That was another big lesson for me in this business.

TAKEAWAYS

• Everyone make mistakes, regardless of career experience, length of service or seniority. Firing someone for making a mistake maybe an error on your part. Once that person has made a mistake and realized the reasons behind it, they are highly unlikely to ever repeat their actions.
  
• Trying something new and untested can lead to mistakes, which should be accepted as part of the learning curve and used as a foundation for future projects. You may find you learn best from your failures.

(Excerpted from: Leading By Example, Lessons Learned Series.)

Tips to become a successful entrepreneur

Indian entrepreneur? These two words no more ring a surprise. While entrepreneurs are blooming across small and big towns in India the people who support them convert their dreams into reality are inceasing as well.

The Indian Angel Network is one such organisation that invests in early stage businesses of entrepreneurs who can create immense value. The members of this network have prior entrepreneurial and/or operational experience that they bring to help nurture and grow early stage businesses.

Ranjit Shastri is one such influential member of the Indian Angel Network. He co-founded PSi, Inc, an investment advisory firm incorporated in New York with an associated company in India. PSi has assisted a wide range of international investors in India, including both strategic investors and private equity firms, in identifying opportunities in India.

In the first of a series where members of the Indian Angel Network offer their tips to entrepreneurs in India, Ranjit Shastri discusses his experience and what he has learnt from it. A Get Ahead Special.

Over the past couple of decades I've observed many entrepreneurs in India and abroad, and have seen some of them achieve great success and others stagnate or sink into oblivion. I've been asked to share some of these experiences, and can also share some more recent experiences that I've had through the Indian Angel Network, India's largest and only-pan India network of individual early stage investors, which has been instrumental in kick-starting a number of ventures in India.

The tips that I've listed below are not based on anything that I've read -- in fact, numerous books have been written on the subject -- but on real experiences with people that I've met and done business with over the years. This is not a scientific or exhaustive list, but the thoughts that have come immediately to mind. I'm sure my entrepreneurial friends will add many more ideas in articles that will follow in the future.

There are three sets of issues that one must consider when thinking about how to become an entrepreneur, particularly if you are born into a middle-class family of professionals (one or more of your parents work for a large company).

The first involves getting started, leaving a safe job or career prospects and jumping into the entrepreneurial fray.

The second issue has to do with maintaining and building a viable business, successfully scaling up so that one has not just managed to 'survive' but also to grow the business and create great value for investors.

Finally, there's the issue of knowing when to move on, either by selling the business or handing over to someone who can bring new energy, skills and ideas to bear. Let's take each of these issues in turn, and examine some of the things you can do to address them.

Getting started

Tip #1: Don't worry about not being courageous enough for the uncertainty of the business world, as being an entrepreneur has nothing to do with courage. People who observe entrepreneurs leaving a secure job and taking the plunge into the unknown sometimes marvel at their courage (or foolhardiness).

Most successful entrepreneurs that I've met, however, don't see themselves as particularly brave. In fact, they do a lot of homework and make contingency plans that take into account the possibility of failure.

I've met a number of entrepreneurs who have left McKinsey & Co., my first employer after business school, because they recognised that becoming a director at McKinsey is not guaranteed for even some of the hardest working, smartest people that you come across in the business world.

Becoming a director at any large organisation has much to do with factors that are not in your control, including personal relationships and the economic cycle that the company happens to be in when promotion decisions are made. While organisations try to be fair, they operate in a world that isn't, and if you recognise that staying put is not necessarily safe you are more likely to get over the fear of venturing out.

Tip #2: Look for a big idea, and be rational.

There's no point taking a big risk if you have a small idea, and from an economic perspective, it's logical to concentrate on expected value, which means the potential value creation times the probability of actually achieving it. So if your job is 100% secure, and the chances of entrepreneurial success are only 10%, then compare your future salary against the expected future value of your venture (the 'payoff') times 10%. 

If the expected value (payoff times 10%) is more than your salary, then logically you should give it a try. However, most people are irrationally risk averse, so if the expected value is not vastly higher than their salary, they would opt for the more certain outcome.

On the other hand, people who are destined to become entrepreneurs are more likely to be sceptical about the security of their job, so they wouldn't assign a 100% probability to the so-called safe option.

Tip #3: Start small.

In Tip #2, I said it's important to think big, but for most entrepreneurs it's also important to start small. A good example is SchoolTrainer, which was started by a Delhi-based Hindi and Math tutor. He has a big idea, but has started out small (just himself).

He currently has less than 100 teachers on his panel, but expects to scale up to a thousand over the next few years. Starting small enables you to experiment, work out the bugs in your systems, and prove your idea. The discipline of a tight budget also forces small companies to do what customers ask them to do. Companies that start operations with a lot of resources often scale up too quickly, waste money and enjoy the luxury of not having to listen to customers.

Tip #4: When faced with the fear of giving up a secure job, concentrate on the equally frightening possibility of someday looking back with regret.

In other words, if you think the risk of entrepreneurship is high, consider the risk of losing a fortune by letting an opportunity slip out of your hands. Of course, explaining this to conservative family members (usually a parent or spouse) may be difficult. For some people, even a 10% chance of failure is too high to contemplate, no matter how big the potential payoff is.

A 90% chance of failure is out of the question. Conservative family members will only be convinced if you have an airtight back up plan, which leads to Tip #5.

Tip #5: Have a backup plan.

One entrepreneur I know asked his employer, a very prestigious professional services firm, for a leave of absence. This gave him time to verify that his idea had merit. He knew that if he failed (which he assumed was likely), he could always return to the relative safety of a conventional career. His friends and acquaintances thought he was gutsy, but he knew he had a safety net.

In the end, he was able to prove his idea during his leave of absence and was able confidently to convert his leave of absence into a separation. He was shrewd, not brave.

(http://www.rediff.com/getahead/2007/nov/07ranjit.htm)

How Vineet Nayar transformed HCL Tech

In 2004, when HCL founder Shiv Nadar approached Vineet Nayar, then HCL Comnet chief, to take over the reins at the floundering infotech major, Nayar refused. A year later, he accepted the offer.

But it was a tough initiation: HCL lost three valuable clients during Nayar's first week as president. HCL had ranked among India's most successful hardware companies during the 1970s and 1980s, but slipped when software services came on the ascendant.

Over the next 18 months, HCL transformed itself from a company that had been all but written-off, to an enterprise that delivered the fastest organic growth among Indian IT companies. Nayar's change management initiative was closely watched by management experts everywhere - it even appears as a case study in a recent issue of Harvard Business Review.

In conversation with Prasad Sangameshwaran, Nayar explained his strategy, emphasising that CEOs need to become servant leaders who enable change. Excerpts:

Why did you turn down the top job at HCL Technologies when it was first offered to you in 2004?

Big, bold companies do not drive innovation. I fell in love with small organisations. At HCL Comnet (the company he founded), we were able to re-engineer ourselves every two years. In a large set-up there was the danger of becoming an administration manager of a larger number of people.

Then, I was worried about not living up to the expectations of the job. Large companies are usually slow on innovation and speed. I was afraid of facing the challenge of bringing innovation and speed in a big enterprise that was very much in need of it.

So why did you take it on the next year?

I had no option. HCLites were proud of its heritage and felt bad that the company had lost its sheen and was not getting its due for what it had achieved in 30 years in the IT space. There were several talented employees with a hunger to transform HCL and there were many like me who thought it would be interesting to build upon this large opportunity.

Was there any resistance while you took over the company?

I don't think so. I was, and continue to be, one of the 45,000 HCLites. There was some scepticism, though, on the success of such radical thoughts of transformation.

How did you combat the sceptics?

Scepticism is a given with anything you do. We decided to communicate directly with all employees. It was important to meet all employees, not electronically but face-to-face, pumping the flesh.

We also communicated trust, transparency and flexibility. Whether it was communication about the current status - "this is us" - to the employees and letting them decide whether they wanted to do something about it, or communicating the early successes - all were equally important.

We needed to communicate success in 90 days. Command and control does not work when you are guiding a couple of thousand individuals. I told them that I would work as an enabler, as a servant leader. My job is defined as not a master strategist, but as a master enabler. Almost always, employees had more answers to the problems than I had.

The other most critical part was to listen. Most CEOs have talking skills and not enough listening skills. I am used to listening, perhaps because I married young (laughs). But I had the advantage of not knowing enough about the industry. So I did not preach, but listened. Younger employees' thoughts are brighter: all we needed to do was unleash their potential and channelise their energy in the right direction. A hands-off approach worked the best for the organisation.

What were some of the early concerns and challenges?

They fell in three buckets. One was with reference to our own capabilities. The challenge was about transformation and we needed significant energy and speed to transform. Second, investors, customers and the market in general had a fixed image of HCL as a company that would be difficult to change. Then, while the passionate majority in the organisation were capable of delivering at high levels, there were a critical few who were not ready to change.

Since HCL is a public, listed company, the challenge was to ensure business continuity and simultaneously transform on the run. We had to ensure that quarter-on-quarter results and the profit and revenue stories were not compromised.

That is why we funded new investments from reserves. We wanted to prove to the market that our organic business model would grow faster and that we could become the fastest growing company in the IT sector without an acquisition and we would use those proof points as a benchmark.

Now, one of our biggest achievements is that in this transformation journey, we have been the fastest growing IT company among our peers. Without compromising the year-on-year growth, we successfully launched disruptive and innovative initiatives like Employee First, 360-degree, Service + Thinking IT framework and so on.

What was the biggest problem you faced in the transformation process?

The biggest problem was that nobody took us seriously. Our investors, customers and even employees took some time to understand and believe that we as an organisation could change. We had to be disruptive in our thinking. Instead of waiting and watching their reactions, we increased communication with our employees to make them involved.

We had to make many changes internally, including in the organisational structure and the way we used to operate until then. And that could happen only with the acceptance of the people who were to implement these changes.

You had lost three clients in your first week as chief. At that stage, what prompted the decision to chase big deals?

We had to ensure that our vision was on track in 90 days. The biggest deals involving Indian IT companies then were around $10 million. Blue Ocean thinking  [competing in uncontested market space] meant we had to chase bigger deals. We pulled the best and brightest out of their current jobs and asked them to chase the top four or five big deals. The motivating factor for them was that if we won those deals, HCL would never be the same again.

Fortunately, we won three out of those five deals. When we won a project worth $330 million, the world sat up and took notice. Soon everybody in the organisation believed that the transformation could happen.

What lessons from Comnet did you implement at the parent company?

Comnet always demonstrated that the only way to do business is by swimming in blue oceans. At Comnet we reengineered our business four times in eight years so that we were often considered the pioneers offering a unique value in services. If you are not unique, no one will notice you.

The other learning I picked up was disruptive thinking. When I put my 360-degree evaluation on the Intranet within the first 90 days of taking charge at HCL Technologies, it showed that the CEO was willing to put his neck on the line. It is a simple gesture that galvanises others into thinking on similar lines. We claim to be the world's largest democracy, but while running our businesses we are dictatorial towards our employees.

Then we stretched the envelope, with me personally answering queries on our web forum called "U & I". We used a trouble ticket in our Intranet where employees could raise issues and be assured they would be addressed within a certain time frame.

Also, there were service-level agreements for solving issues, which transformed them from being citizens of an autocratic company to citizens who had a voice. Huge energy was unleashed through this initiative.

You said Comnet had reengineered itself every two years. Is it possible to do the same with a large organisation?

We aim to transform HCL Technologies three times over a five-year period. The first transformation was to demonstrate that we would be the fastest in growth with an organic growth strategy.

Then we introduced a pricing model where clients would pay us based on the effectiveness of the transaction. Now, by 2010 we target to get 50 per cent of our revenues from businesses that never existed in 2005.

If you had to do it all over again, what would you do differently? Why?

Well, there is one thing I would have done differently, or additionally. That is to measure the value being created during this transformation in the interface between the employee and the customer.

We are now creating a value portal for our customers to measure the same, but if possible, I would have liked to have done this from Day One of the transformation.

(http://www.rediff.com/money/2007/nov/07inter.htm)

10 secrets for everyday writing success

During my 25 year career in a variety of professional positions in both the private and public sectors, I have written literally thousands of letters and memos and hundreds of reports. If I had to boil down everything I've learned about practical day-to-day writing for both personal and business purposes into 10 key points, this would be my 'Top 10' list.

1. Preparation is the key

Do all of your research first, before you start to write. Even a letter normally requires some minor research such as making some phone calls or reviewing a file. It's also very important to prepare yourself mentally before writing. So don't sit down to write too soon. Mull it over for a while, sometimes a day or two, sometimes an hour or two, depending on the complexity of the job at hand. It's amazing how the sub-conscious mind will work on the problem 'behind the scenes' and when you finally do start writing, it will flow.

2. Always use a sample

For me, this is critical. No matter what I write, it helps tremendously if I have some visual stimulation. If I'm writing a letter I post a copy of a similar letter, or the one I'm responding to, somewhere in my direct line-of-sight. It helps me focus and keeps my mind on the subject at hand, minimising the tendency for my mind to wander. No matter what it is, I always make a point to find some previous work or a sample of work similar to what I'm doing. It really stimulates the creative writing process and increases productivity significantly.

 

3. Shorter is always better

Whether you're writing a report or a letter, look for ways to cut it down in length. Concentrate on conveying the essential message. If something you've written does not enhance the core message, or doesn't add value, consider cutting it. These days, you have to be 'short and to the point' to get your message read.

4. Use concise and appropriate language

Your letter or report should use simple, straightforward language, for clarity and precision. Use short sentences and don't let paragraphs exceed three or four sentences. As much as possible, use language and terminology familiar to the intended recipient. Do not use technical terms and acronyms without explaining them, unless you are certain that the addressee is familiar with them.

5. 'Be' your addressee

A key technique to use when writing anything is to clearly 'visualise' your audience. As you write, try to imagine in your mind's eye the specific person(s) to whom your written product is directed. I often imagine that I am sitting across the boardroom table from my addressee, trying to explain my points in person. Make an effort to see the situation from the other person's perspective. What would you be looking to see if you were the recipient of the letter or report?

6. Do the outline first

Even if it's a one-page letter, it doesn't hurt to jot down a few quick notes on the main points that you want to cover. This process forces you to think logically about exactly what you want to cover and it helps you decide in which order you will approach your subject. For a letter this is helpful. For a report, this is absolutely essential. In fact, I believe that you should force yourself to go through the entire thinking process that is required to develop a complete draft Table of Contents, before you start to write any report.

7. Write and then rewrite

No matter how much preparation I do, I always find that I can improve on the first draft. That's partly because when I'm writing that first version, my main focus is to get the essence of my thoughts down on paper. At that stage I don't worry about perfect phrasing, grammar or logic. My main mission the first time through is to make sure that I capture the critical words and phrases that form the core meaning of what I want to communicate.

8. Format is important

Whatever you are writing, make sure it looks professional. This is where proper formatting comes in. Your credibility and/or that of your organisation is on the line, with your report or letter serving as your representative. If it is not professionally formatted, it will reflect negatively on you, even if the content is good and it is well-written. Rightly or wrongly, the value of your work will diminish in people's eyes if the formatting of your document is shoddy or amateurish looking.

 

9. Read it out loud

Some people who haven't tried it may laugh when they read this, but it really works. At any point during the drafting process, but definitely at the draft final stage, read your report or letter to yourself 'out loud'. It's amazing what one picks up when they actually 'hear' their words as if they were being spoken to them as the addressee. I find this helps me the most in picking up awkward phrasing and unnecessary repetition of words or terms.

10. Check spelling and grammar

Last, but far from least, make sure you double check the spelling and grammar in your document. These days, with spell-checkers built into word processing programs there's really no excuse not to do this. Once again your document is a direct reflection of you and/or your organisation. If it is riddled with spelling mistakes and obvious grammatical errors, it will appear unprofessional and your credibility will suffer. Watch out for the words that sound the same but have completely different meanings that a spell-checker won't pick up. Words such as 'four' and 'fore', for example. Your final read-through out loud should catch any of these.

Whether you're writing a letter, a memorandum, a report or an essay, follow the above tips and you won't go wrong.

 

(http://in.rediff.com/getahead/2007/nov/02writing.htm, Shaun Fawcett is webmaster of the popular www.WritingHelp-Central.com. He is also the author of several best selling 'writing toolkit' eBooks. All of his eBooks and his world famous f-r-e-e Writing Success Course are available at www.WritingHelpTools.com.)