Sunday, June 30, 2019

Boeing and it’s outsourcing woes !!

The  Seattle, US based world's largest aircraft manufacturer
HCL from India has been in global aviation industry news of late, though for the wrong reasons. Known for it's efficient team of engineers and technologists who carry out interesting Research and Development work for major global clients spanning around the globe, this issue has got both Boeing and HCL in hot waters. Boeing Max Issue and the software outsourcing contribution through HCLhas been in the headlines for some time now. 

Boeing, the 103 year old company established in Seattle US is passing through one of the toughest periods in it's history over the past 24 months due to mismanaged outsourcing activities to Engg software partner HCL from India. The matter of fact was that in order to cut costs, Boeing's 737 Max display software was outsourced to HCL from India, who were managing the show with $9-an-hour engineers. There is also an allegation that Boeing is coming with these allegations against HCL in a concerted and veiled attempt to wash it's hands off the two major aircraft disasters that have hit Boeing 737 Max 8 over the last year.

The annual revenue for Boeing in 2018 ((founded in 1916) was US$ 101 billion while that for Airbus, the competitor from France with France, Germany and Spain as the founding members (founded in 1970), during the same period was approximately US$ 73 billion, Boeing has a clear 30% revenue edge over Airbus, but day by day this lead is narrowing down, raising lot of eyebrows.

Dennis Muilenburg, CEO Boeing
Click here for the Boeing's outsourcing disaster story from Bloomberg.

There was no other option for Boeing to remain in business competing with Airbus, than by doing extreme cost-cutting, often at the expense of the life of its customers and by laying off many of it's experienced engineers, some of the finest in the world, who had many years of experience handling safety issues.

Glad that both the Boeing 737 max display software glitches leading to major accidents happened outside US, in Indonesia and Ethiopia, else the iconic company would have been liquidated by now. HCL too has a lot of dirty baggage to carry around because of this incident.. Remains to be seen where they will wash this dirty linen and baggage. 

This is a great case study on how cheap incompetent outsourcing can kill companies and their reputation, leading to large financial burden too .

Will Boeing survive for a decade more ? Maybe, it will. but people have lost their trust and goodwill in this company for ever. They are aware the company will go to any extent to firm up it's bottom line, often at the expense of its valued customers' lives ..

Courtesy CBC news and Boeing ..
Some of the uncomfortable questions, global customers and the traveling public from around the world could ask Boeing would be the following ..

1. Did the Boeing CEO Dennis Muilenburg think correctly before he went on with the 737 Max display software outsourcing issue, though press reports say he still defends his decisions to do so ?

2. Why was there an undue haste in releasing the new 737 Max series with compromised engineering, security, audit processes ?
3. Already having their order books full, why did Boeing show haste in the 737 max models bringing disrepute to a global brand and putting air travel customers in a piquant situation ?

4. Will this temporary glitch and setback to Boeing affect its other development plans for the future ?
5. Is Boeing compromising on quality and audit trail issues / FMEA processes which are affecting the flight-worthiness of it's planes ?
The 160 seater COMAC C919 from China .. airlines.net
Click here for a brief case study  prepared after the Indonesian Lion Air crash of Boeing 737 Max 8 ..

The coming days is sure to bring more news in the public domain and we will be more aware of the pressures Boeing and Airbus are going through in the global competition to catch the airlines dollars .. The advent of Chinese COMAC and possibly India's HAL in the near future can be unsettling news for the aircraft majors.

Click here to read my blog about the top international passenger aircrafts of the world .. The 160 seater twin engined COMAC (Commercial Aircraft Corporation of China) C919 is the new Chinese entrant in the medium capacity, mid-range aircrafts of the world. How soon will it be able to catch up with the 2 major aircraft manufacturers ?

George.. 

Friday, June 28, 2019

Design Thinking workshop at Alliance University

David Kelley, Stanford Design School
As part of the Open Forum of Alliance University, today we did an Open Forum on Design Thinking on Friday, 28 June 2019. Prof. Sukanya Kundu led the discussion on Design Thinking which was followed by myself taking over with some explanation and characteristics of Wicked problems. Wicked problems as different from tamed problems are problems which do not have a single, simple solution, it is dynamic and the optimal points can change over time. Click here for a copy of my presentation .. David Kelley of the Stanford Design School is the founder of Ideo and the original proponent of Design Thinking..

We had a novel empathising approach for the brainstorming activity. Every member taking part in the brainstorming session had to narrate an unfortunate and sad event of their life in the introduction stage to instill an empathising and self involving approach. Click here to understand Brainstorming approach developed by Nobel Prize winner Dr. Roger Sperry from Caltech, which is one of the basic components of Design Thinking ..

Participants of the workshop narrated touching, moving incidents in their life, like escaping from a very serious air accident in Arabia, to being involved in a serious bus accident, to having a serious and crippling low back-ache, novel challenging and professionally threatening work experiences at the first job.

Different stages in Design Thinking starting with empathize .
The participants thus gave a very empathising beginning to the brainstorming or ideating session. After this self-introduction, the members were asked to give innovative suggestions for solving the water crisis that is crippling Bangalore, saving water in the city of Bangalore.

The participants gave very insightful recommendations to solve the water crisis. They are listed here for the benefit of the participants (red indicates the most repeated and important ones as agreed by the participants)

1. Building construction is a cause for water crisis. Stop building construction.

2. Leakage of water to be stopped from leaking pipes and taps

3. Deploy Rainwater Harvesting in homes

4. Washing of cars from municipal / borewell water to be done less frequently

5. Reverse Osmosis to be made available in all homes

6. Reclaim / save water bodies
7. Deploy Rain water harvesting on rooftops in homes

8. Recycling water from kitchen etc

9. Creating awareness on conserving water

10. Sensitise industries to use less water

11. Reduce construction activities

12. Lakes that have been leveled for construction activities should be reclaimed and allowed to fill with water

13. Companies should meet their water needs from their personal resources and by recycling

14. Recycling of waste water by every apartment building
15. Use showers less for bathing, use buckets

16. Use grey water for gardening and toilet uses

17. Have variable capacity flush in toilets

18. Reduce cemented floors to reduce storm water generation

19. Deploy better storm water drainage to allow water to permeate to the ground
The quality and quantity of the discussion we found was quite good. We intend to communicate this to the city infrastructure and municipal authorities.

Prototyping and testing will be done  later as this is a large wicked problem which does not have an exact solution and can have very dynamic solutions.

George

Wednesday, June 26, 2019

The violent death of Mohammed Morsi in Egypt ..

While trying to understand global history, I am tracing through  the life of some contemporary politicians who tried to bring a change but were mercilessly taken out from planet earth and removed from power. Mohammed Morsi of Egypt, the former PM happens to be one such person.

Egyptian PM Morsi and his General El-Sisi. 2012.
Mohammed Morsi happened to be the only popularly elected ruler in modern Egyptian history coming from the Muslim Brotherhood. He died while in court in Cairo while defending his own confinement in prisons for the past six years. What were the charges leveled against Morsi and why did he have to suffer all the torture in Egyptian jails ? The story of the death of Mohammed Morsi is as scared as the tales that come out of the dark country of Egypt.

Of late, the happenings in Egypt has been very unsettling and disturbing. When the first democratically elected government of Egypt came to power under the flag of Islamic Brotherhood in 2012, I thought it was part of the change that was blowing across the Arab World, popularly called the Arab Spring.

I came to know deep  about Egyptian policis only after reading the Malayala Manorama newspaper article of 26 June 2019 which was being published from the South Indian state of Kerala. It gave an excellent article on former Egyptian PM Mohammed Morsi. Was Morsi an extremist who wanted to wipe out all opposition and rule Egypt with an iron fist or was he a moderate ? Did Morsi reflect the dangers inherent in Egyptian mainstream society ? Was Egypt destined to go again into anarchy following troubled times before and after Morsi ?

Egyptian Jail torture, pics by Marwan Nabil
Mohammed Morsi was part of the Muslim Brotherhood cabinet which came to power in 2012 amidst widespread distrust and dissent accusing Morsi of being very close to the Western powers.

Muslim Brotherhood was perceived to be in alignment with ISIS of Iraq and was immediately blocked, Mohammed Morsi selected a senior armed forces personnel of this country El-Sisi to be his Defence Chief. Subsequently, in 2013, in a silent coup, his faithful right hand El Sisi, removed Morsi from power. Morsi was put by his faithful Defence Chief behind bars for the past six years giving his family just three visits to the prison to visit Morsi in six years.

Morsi when taken to the court, in spite of the solitary  confinement of 6 years, where in the presence of the Judge he crumbled down to his death last week.

Did Morsi, the supposed gentle face of Muslim Brotherhood, deserve such a tragic end of life ? He crumbled in the court room while defending himself, probably out of the stress of inhuman torture inflicted on him by the El-Sisi regime.

Why was Morsi put in solitary confinement for six years ? Why was he brutally mistreated while in prison ? Was the situation in Egypt as dangerous as made out by the 21 year old artist student who was rounded for taking part in the Arab Spring (Pro democracy) demonstrations in Egypt. above pic, courtesy Malayala Manorama.

In this June 18 New York Times coverage (click here) of the tragic end of Morsi, we read how the Egyptian military government of El-Sisi has quietly buried its former PM without giving anyone any explanation of what happened and how it all happened ? The people of the ancient land of the Pharaohs, deserves a better treatment from its ruling people ..

What is the future for Egypt in the rest of the 21st century ? Is it going to be as brutal or violent as the earlier days ? While different versions come out of the  mercenary nature of operation of Morsi and his political party, I feel the Egyptian public should have waited to see democracy and rule of law regain legitimacy in their land.

Only the coming days will tell the story of how Egyptians decide to chart the future of their own land .. Perhaps El-Sisi, close to President Trump of US will never face the wrath of actions in this world nor will he be sent to the prison or gallows in this life time.
The more you know about the past, the more prepared you are for the future - Theodore Roosevelt.
George..

Monday, June 24, 2019

Lean Operations MDP experiential workshop

Taiichi Ohno, Father of TPS

Automation applied to an inefficient operation will magnify it's inefficiency - Bill Gates
It was great to be back at 91, Springboard, Koramangala, Bangalore on 22 June 2019 for a Lean Operations Experiential workshop - learning how to make operations efficient and less wasteful !!

This was being jointly conducted between Alliance University Bangalore faculty and www.msmeonline.com, the online startup of Indian small and medium sector industries based out of Bangalore.

There were 10 excited and enthusiastic participants for the experiential Lean workshop (originally Toyota Production System, TPS). 91, Springboard is a great co-work space (click here) and is located in the center of Bangalore city, near Koramangala Forum Mall.

The workshop started with a brief explanation of the pressing necessity for organisations across the world to accept "lean operations" given the pressure to automate almost all industry functions.

Lean Operations history is synonymous with Toyota successes in Japan. Starting from the Toyoda textile loom company to the first automobile which rolled out of Toyota company in 1936, (click here for Model AA)  to the opening of the Toyota Motor Company in 1939, it was a quick and short discussion. The stellar role of Taiichi Ohno in shaping the Toyota Production System cannot be forgotten. According to the author, Value Creation, Standardisation and Continuous Improvement are the main pillars of Toyota Production System or the present Lean Operations.

At first in the organisation, process implementation happens haphazardly in the beginning. Over time, the processes get stabilised and then goes for improvement, optimisation etc.  It is then that gains accrue from the improvements in the processes on the shop floor.

Great Learning and enjoyment at 91, SpringBoard, Koramangala
Bangalore ..
We also discussed how Prof. James Womack from MIT started the idea of studying the Japanese Production system under a US govt grant of $ 5 million, which was disturbing the American car giants like GM, Ford, Cadillac and so on.

Then was born Lean Manufacturing concept that concentrated more on creating value to the customer besides reducing waste with a pull type of manufacturing aiming for unit lot size production, undergoing continuous improvement.

One of the most important Lean Tools is on Workplace Organisation, 5S. We started the experiential learning with the 5S Numbers game which everybody enjoyed, it emphasised the importance of workplace organisation and development and also on safety. Finding missing or displaced items is a major constituent of wasted time on the shopfloor. This concept was stressed by the game in the last phase. 

Industry participants appreciated the practical training
on all facets of lean at the workshop ..
Standard Operating Procedure (SOP) is a set of standard instructions at any work or process which helps to utilise resources efficiently and effectively on the shop floor. The SOP game which we played in a series of steps stressed on the importance of having good communication and coded instructions on the processes already implemented and followed before any work is finalised to be undertaken.

The Marshmallow game was played to understand the impact of teamwork and leadership on teams. The teams displayed great cohesion and understanding while paying this game.

Understanding the difference between Push and Pull systems is very important to understand Lean systems in detail. While Push systems are triggered by the forecast of the customer demand, the pull systems are triggered by the actual customer demand

The next game we played helped to understand the major concepts of Push and Pull type simulation of production, with some paper assembly of planes. The concept of Throughput time, Cycle time and Takt time was well explained by the game. In the practical demo, it was made clear how the Talk time gets changed with changes in the demand for the end product.

Even though we did not have a game on Poka-yoke, there was a good discussion on Poka-yoke and each team through an experience sharing session was asked to come up with minimum two or more types of Poka-yoke they have used in their day-to-day work life. The difference between safety concepts and Poka-yoke was stressed in this discussion.

Industry participants were elated at the experiential learning
Plan-Do-Check-Act is the famous PDCA cycle, also called the Deming cycle. The different phases of the PDCA cycle can be illustrated by playing the PDCA card game, (click here) which involved taking a pack of cards and dividing it among the teams asking them to stick to the objective of keeping the total sum value of cards with each team constant in multiple iterations. Each iteration involved Plan, Do, Check and Act. This gave the teams a good idea of the steps in the PDCA cycle.

The Kaizen (Continuous Improvement) game which was among the most interesting played highlighting the different nature of work processes took almost 45 minutes to complete.
Continuous Improvement is always better than delayed Perfection - Mark Twain.
The learning was good among the four teams and the winning team did the passing of the balls in a minimum time of 3.25 seconds. 

Lean principles were clearly communicated
to the participants 
The Theory of Constraints game was played with the help of the randomly distributed numbers and 2 production lines with five workstations each, each workstation having five machines and with infinite initial inventory.

The practical case necessitated explanation of how Tata Sons made use of Theory of Constraints in crossing over from $ 63 billion in annual revenue to $100 billion around the last years of the first decade of the 21st century. It was a great real-life experience and a great lesson to demonstrate the effectiveness of Theory of Constraints in a corporate environment.

The workshop had a mixed group of participants from the Computer industry and the hard core mechanical engg industry. The requirement or pre-requisite of Automation and getting ready for Industry 4.0 in the near future necessitates standardising and optimising processes in any industry around the world on standard lean principles. It requires the employees and managers getting hands-on experience on how to apply lean principles on the shop floor. The workshop had this focus firmly in mind and was helpful in preparing engineers from across domains with Lean Thinking.

The workshop ended with the sharing of the experiences and the distribution of certificates. The positive feedback received from the participants has motivated us to offer more such editions of this MDP on  a monthly basis in future for the benefit of the industry.

George

Wednesday, June 19, 2019

Libra and Calibra - the new Facebook cryptocurrency and wallet ..

The aim of this article is to trigger better understanding and awareness about the new FB global fintech instrument and tool, Libra and Calibra ..

The world is getting ready for the 2020 Facebook crypto currency Libra and digital wallet Calibra launch pegged on the US dollar or EU Euro ..  

With enough safety measures set to prevent laundering and frauds as claimed, will the Libra Blockchain enabled Libra cryptocurrency be a global hit ? This could seriously disrupt banks and economies across the world.

Will the countries of the world take to this development wholeheartedly or ban it straightaway?? What will be the countermeasures taken by sovereign countries and their national and private banks to counter Libra ? 

To know more about Libra, read the white paper (click here)

The Libra Association is described by Facebook as an independent, not-for-profit organisation based in Switzerland. It serves two main functions: to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes. - Guardian.com

Click here for a Guardian report ..

Facebook claims that although it created the Libra Association and the Libra Blockchain, once the currency is launched in 2020 the company will withdraw from a leadership role and all members of the association will have equal votes in governance of Libra. The companies who contributed a minimum of $10m(£8m) to be listed as founding members of the Libra Association include tech companies such as PayPal, Ebay, Spotify, Uber and Lyft, as well as financial and venture capital firms such as Andreessen Horowitz, Thrive Capital, Visa and Mastercard. - Guardian.com

Libra's operational control will not be with Facebook but with Libra Association, which is a list of the initial 28 members who contributed $10 million to the Libra corpus. This is to allay any fears with the global community that Facebook would besides having control over their social media data, would also have a grip over their monetary transactions data.

The 28 Founding partners of the Libra Association are as follows - payments (5), technology and market place companies (8), telecommunication companies (2), Blockchain companies (4), venture capital firms (5) and non-profit multilateral organisations (4).
  • MasterCard;
  • PayPal;
  • Payu;
  • Stripe;
  • Visa.
  • Booking Holdings;
  • eBay;
  • Facebook Calibra;
  • Farfetch;
  • Lyft;
  • Mercado Pago;
  • Spotify;
  • Uber.
  • iliad;
  • Vodafone.
  • Anchorage;
  • BisonTrails;
  • Coinbase;
  • Xapo.
  • Andreessen Horowitz;
  • Breakthrough Initiatives;
  • Ribbit Capital;
  • Thrive Capital;
  • Union Square Ventures.
  • Creative Destruction Lab;
  • Kiva;
  • Mercy Corps;
  • Women’s World Banking.
With the backing of these 28 top global corporate entities, FB is trying to convince the world of it's intention to cleanse, streamline and optimise global financial transactions.

Market value for crypto-currencies (cc) globally now stands at between $100 billion - 136 billion. The best way to understand the dynamics of a system is to discuss the strengths, weaknesses and challenges of the system. Similarly in the crypto-currency system, it is indeed a good step to try to understand what are the challenges facing the system ..
Some of the challenges with crypto-currencies are given below (click here for an interesting link)

1. Too volatile and unsustainable - The big holders of cc (whales) make frequent buy and sell walls on crypto-trading platforms by coming up with a selling proposition. This usually dampens the prices on the platform leading to high volatility. Smaller traders dispose of their stocks, enabling the whales to acquire more stock at low rates. The extreme volatility is observed when the prices fluctuate by as much as 49% in a time span of 24 hours.

2. Unregulated markets - Governments have not yet entered this market with the result that more ccs are introduced with high volatility in their prices. Unfair practices cannot be prevented by law. People are hesitant to enter the market out of fear who is responsible if data is hacked, ccs are stolen, governments bring in regulations to stall growth etc.. No rules to prevent laundering of money or black marketing or funds being diverted for paying for drugs, smuggling, kidnappings etc, can only increase the distrust in the minds of the people.

3. Technical limitation - On the present blockchain network only about 10-100 transactions are possible to be finalised per second, while actually transactions many times that number do happen, leading to frustration and slow transactions

4. Limited areas accepting cryptocurrency - Due to lesser stores and establishments accepting ccs, customer dissatisfaction is high leading to distrust and finally low usage

5. Limited functionality - presently cc trading happens by just sending cc across the network. Actually we need to enable different types of accounts, built-in payment systems, mobile top-up, encrypted messaging, a more unified open platform etc ..

6. Costly for the time being - Due to low penetration, the customer now pays heavily for the transactions, which needs to be reduced to a uniform rate.
7. A disruptive tool : Bitcoin trade could disrupt banks present intermediary role in financial transactions in a big way and could greatly undermine their current influence on societies.
8. Visibility across media - Will my social media friends see my financial transaction data ? 
How will Libra overcome these challenges ? Libra can provide a fast and reliable blockchain platform for faster transactions. It can bring in valuable and interesting functionality than just trading in cc, due to the wide clientele FB has, the usage can spread very fast, if initially some free credit could be given to each customer (an airdrop to kickstart activities in the system).

INSEAD Finance Professor Antonio Fatas writes in this 2018 article in HBR (click here), how banks can be severely inconvenienced or otherwise with the launch of crytocurriencies in general. 

From an educational and awareness perspective what are the other challenges the new cryptocurrency is likely to encounter ? Do you think Libra will succeed or be just like any other global national currency ? Do you think FB should transition from social media and communication world to the Fintech world too ?

George..

Tuesday, June 18, 2019

World unites on ocean pollution..

Plastic from a dead whale, picture courtesy Green Peace
On 28,29 June 2019 in Osaka Japan under the leadership of Shinzo Abe, the Japanese PM, leaders of 20 major economies (G20) of the world are getting together to come up with some thoughts on an action plan to contain the marine plastic waste that has been haunting the world's oceans. 

How serious is the global problem of marine plastic waste ?  

Of the 8.3 billion tons of plastic produced globally since its invention in the fifties, 6.3 billion tons has been condemned as waste. Only 9% of this has been recycled so far, 74% is either dumped in landfills or strewn around, 12% gets incinerated and the rest most probably lands in oceans .. 8 million tonnes of plastics ends up in oceans every year ..  (click here for the NG link)

And plastics take about 600 -1000 years to decompose into micro-plastics that enter our food chain. This is one of the greatest threat to humanity and animals in the form of foreign particles in the bodies leading to cancer and many other ailments.

Of the 34.5 million tons of plastic produced by US (13.4% of global production) in 2015, only about 3.1 million tons (9%) was recycled. All the rest has gone into land fills, incinerated, strewn around or entered water bodies .. Source : US Env. Protection Agency

Really shocking . The reason why G20 nations (click here for NY Times link) have taken it as top priority and have started working on containing the plastics entering global water bodies.

With the largest population, China produced the largest quantity of plastic, at nearly 60 million tonnes. This was followed by the United States at 38 million, Germany at 14.5 million and Brazil at 12 million tonnes.

Only 9% of the plastics generated by these 4 countries was recycled, these under developed countries caused the maximum plastic pollution by way of land fills, incineration and dumping in oceans .. (click here for the link)

In terms of plastic waste produced per person the under developed country of Germany tops at 0.5 kg /person/ day followed by the US at 0.4 kg/person/day .. Where do these wastes go, either to landfills (ground pollution), incineration (air pollution) or oceans (water pollution).

The reality is China, US and Germany are the greatest irresponsible plastic polluters on our planet .. (click here)

Regarding air pollution the picture is no way different, as pointed by this World Economic Forum Report. China's total CO2 equivalent pollution of air is about 29%, followed by US at 14% and India at 6-7%  (top 3 global air polluters).. China and US account for almost 45% of global air pollution, which is easily covered up again in statistics ..

Before the industrial revolution, levels of atmospheric CO2 were around 280 parts per million (ppm). By 2013, that level had breached the 400ppm mark for the first time. On 3 June 2019 it stood at 414.40ppm. For 300 years the industrialised world has been polluting the air and for the past 40 years, China and India too have joined in ..

Who is the biggest culprit in this game of global silent covered-up environmental pollution, it is very clear as daylight .. (click here)

Cancer Incidence : Overall, the sad part of this environmental pollution for air, land and water is revealed in this vital health statistic .. cancer incidence, from World Health Organisation Cancer Today website .. 

Cancer prevalence rates in top 3 economies of the world (as percentage of population)

China 0.55% (5.5 in 1000)
US  2.2% (22 in 1000)
India 0.17% (1.7 in 1000)

Cancer prevalence rates
US = 13x India
US = 4x China
China = 3.2x India

The heavy price developed countries have to pay for their under-developed thinking .. (click here)

If the world does not unite on fixing this ocean plastics pollution by the different countries of the world, it is going to be a serious issue not only for humanity but the animals on planet earth and all the sea living creatures and fishes swimming in our oceans. Click here for a video of a whale that was shot off the Norwegian coast which had a whole bunch of plastic waste inside its body.

Click here for the greenpeace article on the ocean pollution thats haunting the world.

Boyan Slat with the largest ocean cleanup project
One of the most suggestion is going to be increasing the percentage of recycled plastic globally from just 9% to double or triple that amount in the next ten years. This will ensure that more plastic, which is by now accepted as an important constituent of human development and culture, finds use in not just single use applications but reused and recycled in different forms and finally may be used even in mixing with bitumen to lay roads. The main focus should be to limit the plastics entering landfills, oceans and being incinerated with fumes entering the air. It can limit the spread of the scourge of the present generation - cancer ..

Boyan Slat, the ocean cleanup kid from Uty of Delft, Netherlands, 24 years old ..(click here for the video).     His Ocean cleanup project (click here)

George..

Wednesday, June 12, 2019

Why is Sustainability / Environmental protection not a strategy for Drucker, Porter or Mintzberg ?

Father of Modern Management theory
Over the years Management thinkers have framed the confines and have been the thought leaders who guided management theory for almost a century now. Peter Drucker in the 50s and 60s spoke of competition on price, of how organisations competed solely on the price at which their products were sold to the customer.

Over time management thinkers of strategy moved from simple competition on price to the Five Forces Porter's model (click here for the link) and Porter's generic strategies model (click here for the link) while Mintzberg provided the emergent strategies model (click here for the link) which stressed on organisations' strategies emerging over time.

What is strategy from a business perspective and how does it define the strategic direction for the business ?
Mission is about what will be achieved; the value network is about with whom value will be created and captured; strategy is about how resources should be allocated to accomplish the mission in the context of the value network; and vision and incentives is about why people in the organization should feel motivated to perform at a high level. Together, the mission, network, strategy, and vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action in complex organizations - Micheal Watkins
In all of the above statements and definitions of strategy, we find the environment does not play a role, as these statements came mainly from geographies that cared less about the environment or knew less about the impact of human actions on the environment. The burning question that comes to everyone's mind then is, why was the environment neglected all these years by the industrialised and developing countries ? Is there no salvation for the environment from the wanton destruction we see today ?

Business strategist, propounded the Five Forces model
What is an environmental strategy ? 

Environmental strategies can be defined as a set of initiatives that can reduce the impact of operations on the natural environment through products, processes and corporate policies such as reducing energy consumption and waste, using green sustainable resources and environmental management system implementation. : Hengky Latan et al


It is for the global bodies like United Nations alongside nations to play a major role in environmental protection in reducing environmental pollution. US is a major and significant polluter of the world not signing on the Kyoto Protocol (click here for the link) leading to its failure and the adoption of the new Paris protocol.

The other explanation of the major threat of environmental pollution advanced which we see of late is due to the growth of the major global economies of China and India. Growth inevitably leads to environmental destruction as has been witnessed and recorded during the nineteenth and twentieth centuries with the growth of Europe and North America. Porter while formulating his five forces theory would not have considered environment due to the limited knowledge about sustainability and environment in public domain. But nature is more intelligent and impactful, it works beyond the minds of Porter or Drucker ..

It is a significant opinion that environmental sustainability be included as the sixth force in Porter's 6 forces model (an extension of the Five Forces Model) and redefine strategies for the newly emergent industries and countries of the world.

Henry Mintzberg, Emergent Strategies model
In hindsight, the emergence of sustainability and environmental considerations is nothing but a part of the Mintzberg's Emergent Strategies model where over the past fifty years or so, global corporations and countries have identified and understood the emergent need to preserve the environment facing the threat of imminent global climate change.

Ernest and Young (EY) has come up with this white paper (click here) on why sustainability integration is important to future proof one's business and how environmental sustainability can be incorporated into the organisational strategy.

If this model of environmental inclusion is considered, Africa would emerge as the next hotbed of growth, development and innovation to power the manufacturing world.  The existing nations of US, China, India, Japan, South East Asia nations, Europe and Australia would be catering more to the service oriented economy. The middle east economies would still be somewhere in between service and manufacturing, as oil would still continue to dominate their economies as solar energy utilisation would improve and fossil fuel reserves will exist for a couple more centuries, at the most.

The purpose of this article is to stress on role of environment as part of the growth and sustainability strategy of an organisation. Porters' Five Forces model and the Mintzberg Emergent Strategies model need to integrate Environmental sustainability as a strategy that would emerge as a force to be reckoned with in the coming years.

Ref : 1. Hengky Latan et al, Effects of environmental strategy, environmental uncertainty and top management's commitment on corporate environmental performance: The role of environmental management accounting - , Journal of Cleaner Production, vol. No. 180, April, 2018.
2. Micheal Watkins, Demystifying Strategy : The What, Who, How and Why, HBR, Sept, 2007, 

George ..

Kochi airport’s unique insolation remains unchallenged for four years ..

VJ Kurien, the architect of a modern Kerala and a modern India ..

V J Kurien IAS, is the brain behind the 100% solar energy powered and 10 million annual traffic Kochi International Airport ..

How can a Kerala airport working on a public-private partnership provide faultless service to customers, annually 10 million traffic, after having adopted 100% solar energy for about 4 years remain unchallenged and win the 2018 United Nations Environmental Programme (UNEP) award for the Champion of the Earth .. (click here for the video link) ? Dedication, hardwork, vision and the persistence to follow a great dream which nobody ever dreamt and thought would be humanely possible ..

What is an environmental strategy ? 

Environmental strategies can be defined as a set of initiatives that can reduce the impact of operations on the natural environment through products, processes and corporate policies such as reducing energy consumption and waste, using green sustainable resources and environmental management system implementation. : Hengky Latan et al

Kerala floods of Aug '18 inundated the airport
As we near four years of Kochi airport's unique and pioneering insolation,we need to understand there is a lot for the other countries of the world to imbibe from this exercise. There has been no competition for Kochi airport in all these four years 👍..

Scenic beauty of Kochi airport
Kudos to Kurien and his team at Kochi 👍👍 What makes this insolation so unique is the fact that except for the great floods which hit the state of Kerala, more so the Kochi airport (click here for a link) and surrounding areas in August 2018, the airport has not had a glitch or problem with the switch to solar power.

It definitely speaks volumes of the technical expertise provided to the airport by Bosch from Germany and the technical skills of the employees and contractors alike who have made this airport world-class.

View of airport with the solar paneled car port
Click here for a link to how creative and green have been the airport growing vegetables ..

Click here to read why the author feels the rest of the world is unable to catch up ..

Click here for a case study on Kochi airport prepared by the author for a conference in IIM Bangalore in 2018 ..

George 

Friday, June 07, 2019

Is your growth strategy powered by technology or the unsatisfied customer ?

Looking at disruption across society, what is a special characteristic of this disruption. More often than not, we find there is a technology component to it. So now the question is simple, did technology initiate the disruption of customer desire for a change or better service. Going through the June '19 HBR article by Thales Teixeira, Disruption starts with unhappy customers, not technology, click here for the link, I am more than convinced. 

We are moving through a lot of technological changes in the present age. How is it impacting the different sectors of knowledge ? Is it wiping the other areas of subject knowledge acquired over hundreds of years of research or assisting reaching decisions, conclusions in these areas quickly and with little effort with the use of modern tools of science and technology ?

The latter is true. Technology is not wiping traditional areas of knowledge, but it has pervaded all areas of knowledge and helps the customers to reach solutions much faster. Let me try to explain it better ..

Even though we acclaim all the new developments of technology resulting in faster computers, information processing, more effective displays and comprehending abilities enabling better and faster decision making, let us keep in mind that the basic subject area still remains intact. It is not disturbed. Technology is a tool used here to help arrive at decisions faster.

If we look at all the technology changes that have impacted the world of late, it is interesting to note that all these technological improvements have come about as there was a customer need for it.  Indeed customer need was the trigger .. If customers  were not ready to accept the business offering, no technology would have evolved to meet the need.

Tracing the growth of Alibaba, the largest e-commerce portal of the world. The customer need first was a e-commerce platform for the Chinese people to search for an item and place an order, then it was a safe platform to exchange cash, then a guarantee that only quality products get shipped, then a facility to enable faster shipment and so on. See how the customer value chain (CVC) got improved and disrupted the online market for the better with each new addition of components for better customer service and implementation of technology like the cloud, e-commerce etc..

If the unsatisfied customer had not triggered the change, technology would never have developed to match the customer needs. This only confirms beyond doubt that it is unsatisfied customer need that drives technological change and growth and not the other way around. Even though I am a hardcore technology guy with baptism and studies at some of the best technology institutions of the world, I still have to say that finally all technology progress is of no use if the customer is not ready to change and disrupt the system.

If one looks at Amazon a similar story would unveil. First Amazon started with books, then it went to electronic items, stationery, white goods, fashion goods and of late they have also moved to the travel industry - all desired by customer and leading to the  disruption.
Let us not forget the old adage, technology is ONLY a tool and an excellent tool at that to help the industry and the customer.
The moment we we give it a bigger role, technology becomes our enemy and it can have very unfortunate implications and impacts. Understanding this is the key to managing effective disruption of the markets and to focus on growth.

George..

Tuesday, June 04, 2019

Why is Huawei in the cross hairs of industrial dispute between US and China ..

Who will blink first ??
Huawei is the world's largest telecommunication network equipment manufacturer after it overtook Ericsson in 2012. It is the second largest manufacturer of mobile phones in the world after Samsung. It operates out of Shenzen, the Silicon Valley of China.

The company has a strange ownership pattern. It is entirely employee-owned with the founder Ren Zhengfai, now at 74 years still an employee, owning 1.4% shares of the company and the rest owned by 82,471 of the 1,75,000 employees, who are decided on their contribution to the company.  (click here for the 2015 HBR paper on Huawei culture..)

The values that drive the Huawei work culture as identified by David De Cremer, faculty at Judge Business School, Cambridge, UK, and the author of the above paper are as follows,
  • Customer-First
  • Employee Dedication
  • Long term thinking and
  • Slow decision making 
Huawei places great emphasis on the customers in all their activities. As a first priority Huawei places great emphasis on meeting the customer needs. Meeting tough customer challenges has helped the company to acquire competencies that helped them in solving issues and gaining access to large markets in the middle east. It believes that a dedicated and committed workforce makes the company competitive and motivates the committed employee by giving him stock options..

Ren Zhengfai, 74 years, employee no.1 ..
army background with People's Liberation Army,
He is still in control as mentor .. courtesy ET
Huawei in addition has a planning policy where decision making takes time and long-term thinking helps the company plan for the future by a decade in advance unlike other European network hardware companies who plan by a quarter or a year.  The rotating CEO policy is another reform that has helped Huawei grow. The employees are motivated to read extensively and have intellectual exchanges inside the company, a culture called the "Power of Thinking" and feedback is shared with the employees to help improve the company.

Huawei was started in China in 1987 by Ren Zhengfai. Approximately 40,000 employees are non-Chinese. Huawei has Employee Stock Option Plan (ESOP) plans for its Chinese employees and deploys a time based Unit Plan for its non-Chinese employees. Click here for the Washington Post report .. 

From $48 billion in 2014, for the first time Huawei crossed $100 billion in revenue in 2018, reaching $107 billion. The last four years has seen phenomenal growth in its foreign revenue stream. It is one of the few Chinese companies receiving majority of it's revenues (almost 67%) from outside China, unlike other Chinese companies which generate their maximum revenue from within China. It is bigger than IBM and as big as the Indian conglomerate Tata Sons. What Tata Sons achieved in 150 years, Huawei achieved in 32 years ..

Of late, Huawei has been accused of Intellectual Property (IP) violations and engaging in espionage for the Chinese government by the Trump administration. Accordingly in August 2019, Huawei products will not be sold in US, as per a directive from President Trump blocking Huawei presence in US. Huawei also owns the Honour brand of smartphones.

A Huawei service centre in Brussels. Courtesy NY Times
The US ban on Huawei is slowly spreading to Europe, with already 20% Huawei share. Google already under pressure from Trump and US administration has already said that it is stopping providing Android OS, Google maps and other services to Huawei phones sold across the world. The loss of Google functionality for Huawei and Honour phones could in future be a big setback for Huawei.

Click here for the New York Times report giving a good picture of the scene in Europe which is closely linked to American economic system. European companies are slowly being armtwisted by US sanctions to fall in line.

Being a completely employee-owned private company in China, Huawei has a perfect role model for a socialistic type of company ownership. It's success would have been a morale booster to socialistic and communist systems in different parts of the world. Based on it's success, Huawei has great plans to grow and establish itself across the world. Huawei earns 50% of its revenues from smartphone sale through the brands Huawei and Honour, while the rest 50% sales come from selling 5G network equipment, the world leader, and providing  cloud based platforms.

How will US blockage affect Huawei revenues and growth ? If US and Europe ban Huawei products, will Huawei be able to sustain its business growing across the world having touched $107 billion globally.

The US plan is to stop Huawei from developing a stranglehold of the world through its 5G technology, being the leading provider of 5G network equipment across the world and gradual domination of the world. Click here for the ET report ..

The threat US senses from Chinese domination of the 5G and smartphone market and global communication is gradual loss of US control and influence across the world. This is a scenario US cannot and is afraid to see. Google has to toe US govt line else it be kicked out of US.

The much acclaimed Reliance Jio 4G high speed fibre optic telecom network in India works on Huawei backbone. It remains to be seen in the coming weeks, how American sanctions will affect Huawei network equipment users in Europe and Asia ..

Will Huawei continue its telecom network espionage activities in other countries like India, UK, France, Germany as well ? Foxconn in China has received reduced orders from Huawei to assemble Huawei ad Honour phones and has shut down some of its assembly factories. intel and Qualcom has stopped supplying microprocessors to Huawei. Huawei's introduction of ARC OS for its phones, can change the global mobile phone OS ecosystem. Day by day the situation is getting dicier for Huawei.

Is there anything more than what meets the eye ? Is US wary of Chinese dominance that could put US technology companies at risk of losing their edge and competence over the rest of the world ? Will Chinese dominance in the critical areas of 5G, IoT, Driverless cars etc be a threat to US critical edge and dominance of the rest of the world in the future ?

George


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