Corporate Raider or White Knight...?

I am often tempted to ask this question when some aggressive investor ( *corporate raider* for some ) gets tired of a mediocre CEO and his puppet Board, loses his cool and demonstrates another way of running the business.

What’s wrong with that…? Bad managements have no right to run companies.. Even as they systematically destroy shareholder wealth quarter after quarter, they enrich themselves by fat compensation and attractive stock options. Not content with that, at appropriate low price points, they shamelessly backdate them too.

If you were a small shareholder, you would feel powerless. There’s not much that you can do except to post a stinker at some message board or vent your ire by simply selling your shares and exiting the company. The underperforming CEO would come up with some poison pill to ward off the raider which can be even more damaging to you. The CEO does it because he can go back to sleep after the company swallows the pill and he still managing to salvage his pay and stock options. If there’s someone who could queer the moron’s pitch, it is that `bully’ ( sounds much better than `raider’ ) and his cronies who can pull these sleepy Boards out of their torpor.

The flipside is that such moves from bullies need not always be well intentioned. When allowed in, he can strip the company of its assets and walk away with his kill as fast as he stormed in. That is, if the sum-of-parts valuation would yield him more than the whole. But note that it’s a *bad intention* only from a mediocre CEO’s / employee’s perspective, not at all to another common shareholder to whom it could as well present a tremendous exit opportunity. The stock price would shoot up in anticipation of an imminent bidding war between the bully and other counter bidders ( Closer home in India, we can recall the price spirals witnessed by ACC when big bull Harshad Mehta zoomed in on it, L&T when Reliance cornered a sizeable chunk - all these stocks were dogs up until then – that’s what bullies get attracted by ! ) - what more can the common shareholder ask for ?

Indeed they are White Knights for the hapless small shareholder at least.

Glib v. Articulate

I normally don’t do business on Sundays. Today I made an exception. A team of enthusiastic startup entrepreneurs who wanted my time during last week could not be accommodated since I had a marriage in the family taking up most of my time. In the end I was certain that it was time well spent since they had worked on the idea thoroughly and had exercised their presentation very well.

What stood out was the composition of the team itself. While all three were sound in terms of their respective skill sets ( Technology, Marketing and Finance ), their conversation style was very diverse. Throughout the conference, the Finance guy hardly spoke. The Marketing guy was rattling out all the numbers in the spreadsheet ( I told you they had worked on the idea thoroughly ) and the Tech guy was pretty communicative too. I was about to conclude that these two would be the torch bearers the Finance guy came up with a couple of good insights after he heard the other two leaving out an important feature on the business model. That was the clincher why I took them under my wings.

It reminded me of the old debate Glib v. Articulate style of conversations. Which one’s better…? Often it's the glib talker who steals all credits.

Everyone is talented. Certainly not everyone is as talented as everyone else, but every individual has certain things they are good at, and certain things they suck at.

Sometimes, coming to a decision quickly is a result of the group momentum to make a quick decision, not necessarily due to the nature of the situation. Unless there are life threatening circumstances, very few decisions need to be made on the spot. A decision to rearchitect the database access for a given software product can probably stand a little think time.

This pressure to decide provides a ripe environment for your glib talkers.

One of the techniques I've used in the past is the “Lag-a-day”. It just meant the group breaks for a day and then reassembles to make the final decision. Lag-a-day could be called by anyone in the group whenever we were deciding from a slew of seemingly plausible options but where we felt we hadn't covered all of the aspects. If it felt like we were missing something, chances are we were. This gave people time to back away and think about what they were getting ready to do.

The beauty of this is that it reduces the first mover effect of the fast talkers. People get to take time to organize, digest and process. I found it also encouraged better problem solving techniques since people hate meeting a second time. By changing the pace of the process, you retain more control of the situation.

In the end, the rule saved us several times as people came back to the table with a changed perspective and were able to make better decisions.

I'd rather take the time to make a good decision once than to make three bad decisions quickly. But that doesn’t mean you shouldn’t be quick on the uptake which is definitely sexy.

Personal Contact Centre..? Check out Talk Plus.

In all the hype surrounding iPhone, many other cool launches at CES went unnoticed. The reviewers too were busy serenading iPhone, they missed out on a highly innovative and cool product from Talk Plus - New Multi-line Service For Mobile Phone Allows Subscribers To Instantly Alter Caller ID.

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Talk Plus introduced two new mobile products that will allow active professionals and individuals to more precisely manage their inbound and outbound calls. By allowing customers to instantly alter their outbound caller ID to any pre-authorized number, and by enabling advanced features for inbound calls, the TalkPlus system can transform the typical limited-feature mobile device into a fully-featured call management system.

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Worth checking out.

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It's the cool app that matters, stupid...!

God probably wouldn't mind if He looked like Steve Jobs.

I just can’t stop wondering at the way Apple’s ( and with it Steve Jobs’ too ) fortunes swing. It hit the roof with Mac in the 80’s and then it slid underground for quite a while when Microsoft took centre stage. As Microsoft was looking invincible, Apple upped the ante with its iPod – a mega hit. And while it stayed hit, now at California Electronic Show (CES), Steve Jobs eclipsed Bill Gates by pulling yet another rabbit – the iPhone. Going by the immediate upward propulsion in Apple’s stock price, the rave reviews are not entirely stage managed.

None could’ve ever given the college dropout, whose biological parents gave him up for adoption, such a chance. Jobs has presided over four major game-changing product launches: the Apple II, the Macintosh, the iPod, and the iPhone; five if you count the release of Pixar's Toy Story, which I'm inclined to. He's like Willy Wonka and Harry Potter rolled up into one.

Jobs’s zealousness about product development— and enforcing his personal vision—remains as relentless as ever. He keeps Apple’s management structure unusually flat for a 20,000-person company, so he can see what’s happening at ground level. There is just one committee in the whole of Apple, to establish prices. I can’t think of a comparable company that does no—zero—market research with its customers. Ironically, Jobs's personal style could not be more at odds with the brand he has created. If the motto for Apple's consumers is “think different,” the motto for Apple employees is “think like Steve."

Apple’s arrogance can inspire resentment, which is one reason for some of the glee over Jobs's stock options woes: taking pleasure in seeing a special person knocked down a peg is a great American pastime.

Apple’s iPhone breaks two basic axioms of consumer technology. One, when you take an application and put it on a phone, that application must be reduced to a crippled and annoying version of itself. Two, when you take two devices --such as an iPod and a phone -- and squish them into one, both devices must necessarily become lamer versions of themselves. The iPhone is a phone, an iPod, and a mini-Internet computer all at once, and contrary to Newton -- who knew a thing or two about apples -- they all occupy the same space at the same time, but without taking a hit in performance. In a way iPhone is the wrong name for it. It's a handheld computing platform that just happens to contain a phone.

The only bitter after-taste can come in the form of an adverse outcome of a Cisco lawsuit against the trademark iPhone ( which it only recently applied to a Linksys VoIP phone set ). Anyone unglued about the name of this product is seriously logic impaired. It doesn't even matter in the slightest.

But then who cares what this is called ? Apple could call it the Apple Phone. It could call it "French Canadian Genitalia" or even "the Hebrew Profanity" and still sell it…

It’s the cool app that matters, stupid.

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“ Honey, I screened the kid...! ”

I don’t want to get into ethical debate surrounding Eugenics. If it’s bad, let’s discard. But for the moment, I purely view it as a technology for race improvement and hence squarely fitting within the object framework of this blog – which is to identify hot ideas for VCs to back.

Thanks to advancement in technology, Parents undergoing In-Vitro Fertilization (IVF) can now choose embryos based on their genetic risk of cancer and Alzheimer's. It’s called Pre-implantation Genetic Diagnosis (PGD) : genetic testing carried out after IVF but before a fetus is returned to its mother's womb. The number of testing options is rapidly growing as scientists discover genetic variants linked to myriad health problems, including cancer, heart disease, and diabetes.

In India, we can’t leave the situation too open since indiscriminate sex determination with a male bias has resulted in skewed male : female ratios. In some northern states like Haryana, Punjab, Uttar Pradesh and Bihar, the ratio of one female to five males is so acute that there aren’t enough girls to be married to. This is a direct result of family backed, socially supported interventions in encouraging survival of male children only. But these question the very morality, character and individual conscience of the wrongdoer ( consenting parent ) and the abettor ( the clinician / mid-wife ). Not much can be done thro legislative or policy intervention which is too difficult to enforce anyway. We have religious controversy over embryos and a notion of reproductive freedom that is probably the strongest in the world.

I think that should not be a setback for technology coming to the aid of better healthcare or pain relief. Like in the U.K, we can have one centralized authority that decides on policy, and often these decisions are based on a process of public consultation, so it is actually the outcome of a democratic process, a fallout of political consensus.

One of the biggest fears with PGD is that parents will want to select embryos that are genetically predisposed to being superb athletes or good at math. When you get to enhancement selection, such as choosing physical traits or personality traits, there's this tension between the fear of eugenics on one hand and reproductive freedom on the other.

Procreative beneficence, the responsibility to benefit future children as much as we can is also our ethical responsibility. If you can bring a child into this world with better genetic equipment, it is our ethical obligation to do so, just like providing medical care.

Would this kind of testing modify our relationship with children….? Until now we saw them as gifts. What we got was what we got. Once we try to control their identities, we'll see them as commodities, a product that should meet a certain standard. If you bought genetic equipment to have an athlete, will you be upset if you get a musician ?

This argument is supported by a lot of social change we see anyway. We're hyper-parenting, pushing our children very hard. We send them to the best schools and a lot of extracurricular activities, and we expect perfection. Once we can use genetic tools, it will just go out of control.

I suspect if we ever regulate anything in this country, it might be these uses. For example, lately we've seen a lot of literature about the God gene, the notion [that] there is genetic basis to faith or spirituality. If we ever get to the point where we can influence such complex traits, public outcry will be such that we might be able to regulate against certain uses.

What remains is whether biologically altering an embryo is any different than socially altering a child. But that depends on what you think about genes and the environment--the nature-nurture debate. I personally think that although there are significant differences between educationally and genetically shaping the identities of children, in many ways they are similar. I'm a strong believer in genetics, but you can never reduce human talent to genetics.

You think it’s a hot idea to back…?

Anatomy of attrition

Where have all the talent gone …? What attracts them…? My friend Raghavan, VP-HR of a BPO wondered. According to Raghavan, cost of attrition is 1.5 times the annual salary.

His Management tried everything. They declared war on attrition and tackled it head on ( anti-poaching agreements). Sometimes even adopted a more accommodative approach ( options like good rewards, bonding programme, flexible working hours and stronger career path ). Nothing seemed to have worked, not at least in IT / ITES industry. Now it’s slowly rubbing on other industries too. Be it manufacturing, healthcare, Engineering, Retail, FMCG – all of them are united in their grief.

I was meeting him after long and allowed myself an engaging discussion. In our own little attempt to find a solution, we set about dissecting the human nature tself. We used the hotel stationery to list out what triggers attrition.

In pursuit of heart : There’s this deep hunger that pervades modern life. To pursue what we genuinely care about than to stick with a job that we do for a living. Those who tried it felt it’s cool, extremely satisfying though a little rickety to begin with. It makes a lot of sense and it’s worth doing – because we put our heart to it not just head.

Self esteem : They're sick of working for organizations that treat them as if they didn't exist, thanks to those self deluding, arrogant control freaks who turn up day after day in their indulgent suits. The message clearly is - "tell us some good stories and capture our interest. Don't talk to us as if you've forgotten how to speak. Don't make us feel small. Remind us to be larger. Get a little of that human touch".

Open to risks : They’ve become incredibly resilient and no longer depend on the job you offer. They’ve learnt to assume risks, try out new things and face the consequences. They know the security offered by the job's all temporary, that they can't freeze the good times or hold back the bad. They know they can do it, roll with the punches, regroup, rebuild, pick up the pieces, take another shot. They understand that life’s just like that. And this seemingly simple understanding is the seed of a profound wisdom.

Technology vs. Sociology : Look at the Internet. Once a passive medium has now become so open, so permissive, participation is written all over it. It allows others to create the way they feel and accepts it too. Be it blogs, wikis, social networks or mashups. It accommodates all. It’s getting less and less of technology and more of sociology. Yet managements, especially of large companies still refuse to acknowledge these radical shifts affecting workforces.

Value springs : The fact is, rank and file of the organization often have far more valuable knowledge than managers and super Suits. If you kill off this enthusiasm, you can easily end up with a large, professional-looking, and very expensive behemoth that nobody gives a damn about. Nurture this creativity, egg them on and see where it gets. Top management support needs to come in the form of funding, facilitation, and enough brains to get out of the way. But that puts the Suits right over the edge. It's just not possible, they argue, to run a business by letting everybody improvise.

Spur of Creativity : Best of innovations spring from casual back room banter than from boardrooms. Know why…? It’s often the employee who takes the customer call, meets them informally and get a real feel of what they need. Allow them to deliver and they will build precisely what the customer needs. Not what’s buildable with available inventory on a FIFO basis. ( Suits simply can't score here ). This is precisely the reason why Garage startups are more nimble than corporate widebodies. If you lose your employees, search the Garages. You can't lure them back for half of the world.

I think we've gotten quite far. It's been almost an hour now and I had to catch an early morning flight. Will come back to it later.

For now, I rest my case.