Following is an abridged version of the speech delivered by Mr. Tarun Malaviya (Co-founder and CEO at Mithi) during 3rd Collaboration Retreat 2012 held in September 2012 at Pune (India). Click here to launch the video of the Welcome Address.
Good morning and welcome to this 3rd Edition of the Collaboration Retreat. It is a pleasure to have you with us today…a special thanks to all the speakers and panel members.
We started this program 2 years ago with the idea of starting a conversation with our customer on not just our products and services and their future directions but also on Collaboration and Collaboration Technologies.
In the first edition, we talked about the benefits of building collaboration systems on open standards.
In the second edition, we explored the different collaboration infrastructure strategies at the enterprise. On how to save costs, improve security, build scalability, ensure availability etc.
In this edition of the collaboration retreat, we’ll talk about the impact of collaboration and collaboration technology on business.
In my talk, I hope to present a few perspectives on this…hopefully the cue will be picked up by other speakers for the day to talk about it more.
Businesses exist to make a profit. So to assess the business impact of collaboration, let’s start with Profits. Here is a very basic formula that determines the profits for a business.
Profit = Margin X Velocity
Proponents of Lean Thinking believe that there is more than 80% waste in most systems. We spend nearly 80% of our time at work either waiting or undoing mistakes.
Waiting reduces the Velocity – Waiting…Waste erodes the margin – Waste.
Someone somewhere is Waiting for some information, decision, resolution, instruction…slowing down the velocity of the business.
Somewhere in the company margins are getting eroded due to faulty orders, design flaws, billing errors, wrong choices…when just talking to someone could have eliminated it.
Collaboration Systems can provide the velocity by moving information quickly amongst people improving the responsiveness both within internal team and to the external customers and suppliers. But also helping in reducing errors.
Let’s turn to Operational Cost…
“It is not the profit margin of the past but those of the future that are basically important to the investors.” – Philip Fisher
Inflation causes operational costs to rise and erodes the profit margins…so an enterprise has to continuously search for newer ways to reduce operational costs…with rising travel, transportation and real estate costs,… use of Collaboration Technologies is gaining greater acceptance…use of Collaboration Technology can result in lesser face to face meetings, more up to date information availability, allow for working from home and remote locations…helping eliminate the unnecessary movement of people and things.
E.g. nearly 40% of IBM’s 50,000+ employees in India work from home. Helping save cost & time of travel, commuting but also saving considerably on real estate costs.
On any given day at work, it is not business as usual
“Variation there will always be, between people, in output, in service, in product. The question is, ‘What is the variation trying to tell us about a process, and about the people that work in it?” – Edward W. Deming
The supplier fails to turn-up.
The principal calls in with a change in specification
The competition announces a new offering
The material turns out to be below par
The customer fails to keep with the promised date for making payment
There’s a problem in the network
The final design doesn’t turn out to be not quite what you had expected
A project you were sure was on track hits a technical snag
The customer calls up and wants a change in terms of the contract
When you hit a problem like this what do you do? You to need to communicate it to some one. You need to talk…invariably you fall back on communication/ collaboration system to help you regain control…find a remedy.
Peter Drucker says that – “Business has only two functions — marketing and innovation.”
And Innovations usually start with a conversation.
I read a blog article in Harvard Business Review a few days ago that traces how two, much celebrated companies – lost their way because of dysfunctional internal communications.
I have good reason to believe this to be true. It has happened often in our company that a conversation or a mail has changed the course of our work and led to something better.
Consider the other important thing that Peter Drucker talks about…Marketing
“Markets are a conversation” – Rick Levine et. al.
Markets are a conversation not just between the buyers and sellers but between buyers and between sellers and suppliers.
But the buyers seem to be getting smarter faster than the sellers.
‘A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.’ -Rick Levine et. al.
It is not for nothing that one of India’s most savvy business man – Anand Mahindra is on twitter. He is there engaging his customers, suppliers, partners and employees in a conversation…to understand the markets better.
Finally let’s look at Sustainability
“Every profession bears the responsibility to understand the circumstances that enable its existence.” -Robert Gutman
The earth will probably survive longer than our businesses.
When we talk of sustainability we usually think in terms of the sustainability of the environment or ecology, but here we are talking about the sustainability of a business itself first.
Let’s take the example of a company ‘A’ that has a localised operations. It has a certain profit margin (based on the operational costs) but as the company expands geographically, it faces a challenge to the sustainability of its growth from escalating operational complexities..collaboration technologies offers an antidote to this growing complexity. e.g. quite a few years ago we realised that geographically spreading our operations would grow both the cost and complexity for our business without much value add to our customers…so we started using more and more of internet and collaboration technology to deliver our products and services to our customers. Today it is how we deliver higher quality and faster service to our customers…
More importantly without the collaboration infrastructure in place the sustainability of our growth could have faced several and severe challenges in Logistics, HR, Costs, Quality, Speed….
That’s about all that I had to say for now…I hope I have been able to stir some thinking and leave it now for other speakers of the day to tell us more and tell us about their experiences and insights.