Why all is not bad with Infosys!

Yesterday’s news may not have come as a big surprise to many:

“Cognizant with its strong Q2 revenue has overthrown Infosys as the second largest IT player after TCS (in revenue terms).”

Infosys Ltd. - One of the most respected brands in the Indian IT space is in limelight for all the wrong reasons. A string of poor results, leadership changes in the helm, loss of top executives and fallout in brand ‘Infy’ has placed the company in what can only be described as a mid-life crisis. So what exactly happened to the company, which at least a few years ago, was piped as a major competitor for the ‘Largest IT player in India’ tag?

Trouble started with the global downturn. Clients in US and UK which formed the bulk of Infosys Client pie was facing severe pressure in terms of cost and IT spending. They naturally wanted more value from less cost. Infosys, a company which never negotiated on margin reacted to the situation by offering discounts and even free application development. The general strategy was thus not to compromise on the margin. Their hope was that the situation would return to normalcy once the economy recovers. The economy did recover but not the attitude of client towards cost. The problem was aggravated with Cognizant offering its IT services on a lesser margin. Infosys reasoned that if IT players started playing this price war, then the situation will become worse over time. Their reasoning does have a lot of merit but the refusal to play it out meant - less deals, less clients and now the news that Cognizant has beaten Infosys for the 2^nd spot. So is everything bad with Infosys? Not exactly!

The IT sector is seeing a big shift. Most of the traditional ADM (Application Development & Maintanance) is becoming commoditized (see definition below). For e.g. Infosys reasons that the billing rates of ADM in 2012 are same as in 2002 while the cost base has increased by 70%. Infosys as a company is keeping its productivity high because it gets 31% of its revenue from System Integration and consulting. Also the ADM work got through consulting have higher price points compared to traditional ADM. Thus Infosys wants to move away (or at least decrease its exposure) in a commoditized ADM market. Infosys which has always looked for high quality revenue base will find it tough to fight in a commoditized business solely by waging a price war.

The strategic decision made by Infosys to counter this shift was to move into PPS (Products, platforms and solutions). It means investing in products, solutions, intellectual properties, patents etc. By this Infosys can still keep its foot in high quality software development. This is strategic decision which has very little short term impact but is sure to help in the long run provided they can penetrate into the market. One of the success stories of PPS is the money wallet which it co-created with Airtel. It is an IP which allows customers to do financial transactions over mobile. It is a non-linear business because the company gets paid per transaction. Infosys is also heavily investing in developing platforms. A simple look at Infosys website has thrown information about 9 different platforms under the common name Infosys Edge. These include platforms for digital marketing, social media, credit servicing etc. Products and platforms are intellectual property-led businesses where unlike the time and material model being followed so far, revenue is drawn from licences or as a service.

So if everything goes right, we are looking at a company which in the coming years will rebound right back on top because of the strategic advantage of its PPS portfolio. The other IT companies might be still fighting in the ADM space and competing for lesser and lesser revenue. Of course this is better said than done because Infosys has lot of challenges ahead of them on this rough journey. But that is another article.

P.S. Commoditization - The act of making a process, good or service easy to obtain by making it as uniform, plentiful and affordable as possible. Something becomes commoditized when one offering is nearly indistinguishable from another. As a result of technological innovation, broad-based education and frequent iteration, goods and services become commoditized and, therefore, widely accessible.

Decoding Accenture

Accenture is one of the biggest technological consulting and outsourcing company in the world. Here we try to decode Accenture based on the concepts learned in POM class. A little bit about Accenture is also added to keep the blog interesting.

Origin, History and Milestones

Accenture originated as the business and technology consulting division of accounting firm Arthur Andersen. The division's origins are in a 1953 feasibility study for General Electric. GE asked Arthur Andersen to automate payroll processing and manufacturing at GE's Appliance Park facility near Louisville.

Through the 1990s, there was increasing tension between Andersen Consulting and Arthur Andersen. Andersen Consulting was upset that it was paying Arthur Andersen up to 15% of its profits each year (a condition of the 1989 split was that the more profitable unit – AA or AC – paid the other this sum), while at the same time Arthur Andersen was competing with Andersen Consulting through its own newly established business consulting service line called Arthur Andersen Business Consulting. In August 2000, as a result of the conclusion of arbitration with the International Chamber of Commerce, Andersen Consulting broke all contractual ties with AWSC and Arthur Andersen. As part of the arbitration settlement, Andersen Consulting paid the sum held in escrow (then $1.2 billion) to Arthur Andersen, and was required to change its name, resulting in the entity being renamed Accenture.

On January 1, 2001 Andersen Consulting adopted its current name, "Accenture". The word "Accenture" is supposedly derived from "Accent on the future". Although a marketing consultancy was tasked with finding a new name for the company, the name "Accenture" was submitted by Kim Petersen, a Danish employee from the company's Oslo, Norway office, as a result of an internal competition. Accenture felt that the name should represent its will to be a global consulting leader and high performer, and also intended that the name should not be offensive in any country in which Accenture operates.

On July 19, 2001, Accenture offered initial public offering (IPO) at the price of $14.50 per share in New York Stock Exchange (NYSE); Goldman Sachs and Morgan Stanley served as its lead underwriters. Accenture stock closed the day at $15.17, with the day's high at $15.25. On the first day of the IPO, Accenture raised nearly $1.7 billion.

Core Values

Services

Accenture Organization Structure

Accenture’s organization has evolved into a complicated matrix structure. This organizational method is common in the consulting world and has the following characteristics: each worker is assigned to two bosses in two different hierarchies. The first hierarchy is the executive aspect and is there to get projects completed using the resources that the company has. The second kind of hierarchy in the matrix structure is the functional aspect and is to assure that every person in the organization is well-trained in an industry and is also measured by a boss who is the top-expert in the same field. At Accenture this functional aspect is also a matrix and is made up of five industry-based operating groups and three capability groups. The five operating groups are: Communications & HighTech, Financial Services, Health and Public Service, Products, and Resources each with their own subgroups. The three capability groups are Business Consulting, Technology &Outsourcing, and Business Process Outsourcing. This matrix of operating groups (with their subgroups) and the capability groups can be seen in Figure above.

Accenture Career Path

Organization Culture in Accenture

Accenture has a high performance culture. The corporate culture is rather unique, because they often hire college graduates who are sharp and then train them to specialize in a demanding skill. One of Accenture’s assets is having the “Best People”. Most employees are very active within in the firm; it’s highly encouraged to participate in special interest groups, and recruiting within the firm. Being a global firm, the diversity of its employees is tremendous. There is an expert in almost everything within the firm and there are resources within the firm to locate these experts.

Accenture can be a very demanding place to work. The employees are usually categorized as “work hard, play hard”. Performing for the client is always demanding, especially when there are tight deadlines. It is rare to see a consultant put in 8 hours of work and call it a day; their day will go home with them. But at the same time the firm prides itself in having a good work/life balance for its employees. Accenture is a company that has very high standards and they require dedication and self-discipline on the part of employees who have the commitment and initiative to perform. 

Accenture works hard to achieve and maintain a diverse workforce. Company leadership supports and works hard to bring diversity among employees. Diversity plays an important part in its culture. The firm offers internships, jobs, and scholarships regardless of nationality and other background. Accenture also provides its employees with workshops and training programs such as Valuing Diversity and Men and Women as Colleagues. They have many programs for women and minorities. Accenture's reasons for diversity are sound: “We want to continue bringing in the best and the brightest, and retain them, so we want to make sure that if minorities come in, they see people like them in the higher ranks. And we serve clients, so we want to show our clients a diverse team.” Accenture also tries to achieve diversity within its network of affiliates and alliances.

Suggestions and Observations

Accenture is the Market Leader in Enterprise segment. But they are dehind players like IBM, Capgemini etc in Middle size and Small size segment. They will need to focus on this segment as well.

Slow down will affect both consulting and outsourcing adversely. Accenture Will need to offer more value to stay ahead in the game.

Will need to focus on emerging markets especially Asia – Pacific. Present pie: Americas:44%, EMEA:42%, Asia-Pacific:14%

Conclusion

Accenture is one of the biggest companies in the world with a strong presence in technology consulting and outsourcing. They are known for their high performance both in delivery and company culture. It is a dream company for many graduates and I hope some idea about the company has been shared through this blog

References

• http://www.accenture.com/us-en/Pages/index.aspx
• http://en.wikipedia.org/wiki/Accenture 
• WetFeet Insider Guide to Accenture
• A Look at the Future of Consulting - IS578 Final Paper Submitted by Armand Abaya Shakir, Akbari Mariamma, Kallanchira March 14, 2006.
• www.theofficialboard.com/org-chart/accenture

P.S. Inspite of the meticulous :) research, certain errors may have cropped up in this blog. Please bear with the same. Please point out such errors, if any, by means of comments and I shall make the changes after verifying.

The story of three Buddhist Monks and why every manager should see this

Context:

The story of the three Buddhist Monks is an anime film directed by A Da. The film has got many recognitions including:

• Won the outstanding film award at China's Ministry of Culture.
• Won the Best animated film prize at the first Golden Rooster Awards in 1981.

It is a short and beautiful movie with a wonderful message. A must watch for managers and practitioners who try to implement working-teams in an organization without looking at the other side of the picture.

Film:

Learnings:

The movie throws light on some important concepts of management. As usual I will try to analyse some of these concepts based on the video.

1) Productivity - It is a measure of how well an operations system functions. In previous posts we have come across the important equation:

Excellence = Efficiency X Effectiveness

We have also seen in much detail the importance of effectiveness and also the role of manager in improving the effectiveness of the system. This video completely on the other hand talks about the importance of efficiency. Efficiency can be described by productivity ratio which is Total output/ Total input. 

Different processes have different efficiency levels. One of the important functions of a manager is to optimize the process, improve the work design and try to aim for the most efficient process. 

We see that even during the fire, when all the monks were doing extra effort, their efficiency level is not at par with the final solution. This it is important for managers to be thought leaders and try to come up with innovative solutions to improve efficiency. 

2) Design of Operations systems: So how do we increase the productivity of a system. One of the most important tool is the designing the operation systems. It includes finding answers to 4 main questions:

It is a continuous process of optimizing the work so that maximum efficiency can be derived out of it. So Now that we know the importance of efficiency and a brief idea about how to improve efficiency, let us look at the third part of the puzzle - Team work.

3) Teamwork

Thus we see a totally new phenomenon that as the number of people increase, the productivity has come down drastically. This is the core learning from this story also:

Without Cooperation, 1 monk can fetch 2 buckets of water, 2 monks can fetch 1 bucket of water and 3 monks will fetch no water at all. 

With cooperation, 3 monks can increase the efficiency of the process to a level previously unattainable. (Innovation, creativity etc plays an important part).

Thus every manager who profess the importance of team work should also look at the flip side and the negative effects by having an imbalanced team. Pick two top class Singles tennis players, put them in a team and contest against the number one seeded doubles team. Even though individually the latter is weaker, they can beat the superior opposition thanks to coordination and team work. 

These are some of my observations regarding the video. I would love to hear your comments/suggestions/criticisms. Also please rate this post for feedback purpose.

Organizational Structure Decoded

I have seen companies spending extravagant amount of time and money changing their organization structure. Just recently Infosys Ltd redesigned its organization structure realigning its services around four verticals - BFSI, ECS, Retail and Manufacturing. It makes complete sense since the company wants to present a uniform and consistent deal to its clients and avoid the problems of multiple deals across different offerings. But this was the same company which was split across Geographies in the late 90's. By 2003, the geographies were merged and company was realigned based on respective delivery units. Gradually the whole company was re jigged across six different verticals. Come 2007 and five horizontal units were embedded within these verticals. Finally just a year back, it was realigned on the lines of four verticals with most of the horizontal business units being merged to respective verticals. So coming back to the question. Why does companies spend so much of their money and time on re-jigging their organization structure?

One word answer - because it is that important to the success of the firm. While the strategic decisions are taken by the top line management, it is the effectiveness of the organization structure which translates this strategy into successful implementation. 

Changing Times > Different Strategy > Continuously changing Organization Structure.

A video showing Steve Jobs talking about People Management and Organizational Structure:

In this context we should look at the four main blocks of Organizational Structure:

Let us take the example of Infosys:

Division of work: Complex work can be better executed by dividing it among different people. For example, every project has some people working on different technologies. Some people working on high level design, others doing project management etc.

Departmentalization: This involves grouping people into departments based on some logic. In Infy they are categorized into departments like Delivery, Marketing, HR etc. Also verticals like BFSI, ECS etc. 

Hierarchy: Chooses who reports to who. Engineers reports to lead. Lead reports to PM. PM reports to GPM etc.

Coordination: This involves the integration of departmental activities as a whole and monitoring the effectiveness of this integration.

There are mainly 3 types of Organizational Structures:

Functional Organization:

Product/Market Organization:

Matrix Organization:

One example of Matrix Organization in real life example is the Organization structure of Accenture. 

This organizational method is more common in the consulting world and has the following characteristics:

• Each worker is assigned to two bosses in two different hierarchies. The first hierarchy is the executive aspect and is there to get projects completed using the resources that the company has.
• The second kind of hierarchy in the matrix structure is the functional aspect and its purpose is to train employees in industry specific knowledge.

At Accenture this functional aspect is also a matrix and is made up of five industry-based operating groups and three capability groups as shown in the figure:

These are some of my observations and experience of the different organization structure in IT Industry where I worked.

I leave you with the pic of the class during the Organizational Structure lecture :)

Amazing Advert

Procter and Gamble, one of the largest FMCG companies in the world, and known for building many a great brands has come up with another world class offering this summer. No! It is not another product. It is an AD. 

Olympics is an event which guarantees eyeballs. In fact report suggests that 2008 Beijing Olympics was the most watched event on US television history on NBC and its cable networks. A ride which P&G missed completely back in 2008. 

So how does a company which has absolutely no products in their kitty with the slightest connection to Olympics/Sports/Athletics etc grab this opportunity. Answer - Never forget your target customer. Riding on tagline 'Proud Sponsor of Mom's, P&G has produced one of the most effective ads of 2012. It portrays the everyday struggle of Mom's and the part they play behind the success of Olympic winners. Deeply personal and excruciatingly emotional, the ad manages to strike a chord with the audience. One of the reason why it has got 1.9 million shares catapulting its status as the most shared London Olympics Ad.

This is not something new from P&G. They have tried something very similar in the 2010 winter games as well. The Ad was received well and boosted P&G's sales. A look at the 2010 ad:

If we discard the criticism concerning the use of 'subliminal advertising', the P&G London Olympics Ad is sheer brilliance. Something that will surely help P&G keep its position in the ultra-competitive FMCG market.

The power of Teamwork

Every manager knows the power of Teamwork. In fact the very existence of a manager can be attributed to the phenomenon of 'Teams'. If human beings had long decided to do every task individually, the world would have been a totally different place. The Valley Crossing exercise purely focussed on learning this phenomenon called 'Teamwork'.

Explanation of valley crossing through this picture:

Learnings from this exercise:

1) Concept of Super Teams & Self Manager Teams: Super Teams or High performance teams is a concept which has been successfully adopted by many big corporations like GE, Krafts food, Boeing etc. It can be defined as a group of 3 to 30 workers drawn from different areas of a corporation to solve problems faced daily. The valley crossing exercise had many characteristics of a super team like:

• Participative leadership – different from the tradition approach of a authoritarian team leader.

• Open and clear communication – Communication is the key to crossing valley effectively.

• Mutual trust – Every person needed to trust each other completely especially when their feet was off the ground.

• Managing conflict – dealing with conflict openly and transparently and not allowing grudges to build up and destroy team morale

• Clear goals – The goals were clear, defined and each member in the team fully understood the gravity of the problem.

• Defined roles and responsibilities – each team member understands what they must do (and what they must not do) to demonstrate their commitment to the team and to support team success. Furthermore the roles and  responsibilities keep on changing depending on the situation. 

• Coordinative relationship – the bonds between the team members allow them to seamlessly coordinate their work to achieve both efficiency and effectiveness

• Positive atmosphere – an overall team culture that is open, transparent, positive, future-focused and able to deliver success.

2) Task Interdependence - It is the extent to which a group's work requires its members to interact with one another. We see that in the valley crossing exercise it is of utmost importance to be interdependent on each other so as to mitigate the risk and achieve the task at hand. This also has brings lot of perspectives to the Team performance in reality. What I have observed is that the interdependence increases as we go higher up the corporate ladder. As a worker or low level employee, we can usually get away with completing the task without much interdependence (even though effectively using the team's collective strength may increase productivity). But as we go to strategic level, it is almost impossible to go about a task without the expertise/skill/opinion of your team mates.  Thus Interdependence and its effective usage is crucial for a manager.

3) The Flip side: Quite often we come across people who get their tasks done by their team mates. One of the flip side of team work is that our efforts may go unrecognised or even worse credited to the wrong person. In a competitive and performance oriented environment like ours, it is important to see through these ploys. Some of the good work practises that I have found in good team players in my previous organization includes:

• Pro actively helping members in need.
• Properly communicating the work done to superiors.
• Pro actively using the teams strength for overcoming problems.
• Effective participation in meetings and team events etc.

These are some of the learnings from this exercise.

A video showing the Valley Crossing exercise which happened in NITIE.

Khan Academy - A revolution of sorts

What we call little things are merely the causes of great things; they are the beginning, the embryo, and it is the point of departure which, generally speaking, decides the whole future of an existence. One single black speck may be the beginning of a gangrene, of a storm, of a revolution.

Henri Frederic Amiel

Henri Amiel, the philosopher and poet, who died in the 18th century, would be very happy if he was here now. His words have been given life by another giant of this century - Salman Khan.  A graduate of MIT and Harvard Business School, Khan had been tutoring his cousin Nadia in mathematics using Yahoo!'s Doodle notepad. When other relatives and friends sought similar help, he decided it would be more practical to distribute the tutorials on YouTube. This small embryo blossomed into a revolution when Khan finally quit his job as a hedge fund manager and decided to focus on this full time. It started the revolution called Khan Academy.

The project is funded by donations. Khan Academy is a Non-profit Organization now with significant backing from the Bill & Melinda Gates Foundation and Google. Khan Academy has eclipsed MIT's OpenCourseWare (OCW) in terms of videos viewed—its YouTube channel has over 150 million total views, compared to MIT's 38 million. It also has twice as many subscribers, at more than 320,000.

A Youtube clipping of one of the lessons from Khan Academy:

The story of Khan’s academy is one of inspiration, greatness and a genuine desire to help society. But this story also contains many important management learnings. In this blog, I try to explore some of these learnings.

1)  Sense Ideas: There is a successful business model hidden under every small idea. Khan’s real success was in identifying the opportunity of teaching and making it available for the millions of users worldwide. Quite often we fail to identify these opportunities. Sometimes we may not be able to develop it into the scale that it truly deserves. One should not limit themselves during the process of goal setting. Remember the goal setting exercise: http://nitieim19poma011.blogspot.in/2012/06/mera-tower-sub-se-voonchaaaaaaaaaaaaaa.html that we did in class? We need to set a very high goal for ourselves in any venture we start. At the same time it is important to communicate a realistic goal to stake holders and try to over-achieve the target.

2)  Innovation: Innovate or die. Look at Apple. Look at Google. Every top company will have a story or two to talk about innovation. Khan’s academy is a perfect example of how we can innovate in even the smallest of things. What started as a collection of youtube videos is now a complete teaching platform. Practice exercises. Self-paced learning. Concept of badges etc are amazing pieces of innovation which must have played a big role in the success of this venture. Khan Academy as a whole is an amazing innovation in itself. A video of Microsoft CEO Summit Innovation in Education:

3)  Quality: Never compromise on quality even if it is a non-profit organization. The Khan academy gives detailed statistics of the studies. It is an amazing feature with top notch quality. Quite often, new and budding enterprises are torn between quality and practicality. Should we wait to increase the quality of the product or should we try to enter the market as soon as possible? A good mix is essential for a successful venture.

These are some of my observations regarding Khan Academy