Manish Dhingra: Organizations

Should intellectual capital be made a part of a company's balance sheet.

Tue, 17 May 2005 15:37:43 GMT

As I picked up my copy of the economic times on last Sunday , I came across this article.The process of valuating people based on what they would earn until they retire as mentioned in this article is something I find really shallow and ignorant of the value people bring for what they earn.

This is taking the cue from something I had drafted on the 13th of December 2004; however I could not publish it. So I dug into my archive and here it is.

With the boom being witnessed in the knowledge based industry, mainly companies in the IT, Software and pharmaceutical sectors, a new economic syndrome has come into the fray, that of the knowledge economy. Intellectual capital (I-Capital) forms the only tangible asset of this economy.

Even today, valuations of companies do not include I-Capital as one of the assets which can be showcased on the balance sheet, even though that may be the only asset the companies have. So now comes the big question,” How far can companies ignore their I-Capital and treat it like an asset which cannot be measured?"

On hindsight measuring the I-Capital can be of great benefit to the top management because it gives an indication to the effectiveness and efficiency of the intangibles. Hence this is where knowledge management (KM) becomes such a critical function. So every document, every slide, every case study, every code asset constitutes value and KM ensures that I-capital is owned by the company even if the people take off elsewhere.

Moreover companies which are take over targets by the big daddy's of the knowledge based industry can enhance their valuations based on measurement of this asset. For instance if WIPRO was a take over target by an EDS or an Accenture tomorrow and they valued their I-capital too, their valuations would be much above their 2004-05 revenue figure of $1.6 Billion. Hence this may thwart the bids of the companies trying to take them over.

So probably going forward we could see company valuations showcase the I-capital in the balance sheet. I can already hear the finance minister licking his lips and looking at taxing these I-capital assets. Hmm..just another thought!!

Creating a Performance Driven Organization

Wed, 27 Apr 2005 12:16:06 GMT

The decisions I have made in the past and my career aspirations have placed me today in the enviable (if I may say that) position of creating a charter or more like a strategy for my new company to implement a performance measuring and review process. All organizations whether big or small need to have a concrete performance evaluation process. For a startup like ours this is an even bigger and more important task because it's the depth of these measures that can propel an organization to even greater heights.

What can distinguish our startup from others is this performance evaluation system, whose primary focus would be to instill a sense of hi-performance work ethic (a phrase I have heard several times in my previous org).

So even though I would endeavor to come up with something really wholesome and complete, I still carry a strong impression of this philosophy and the process from my previous organization, which according to me had one of the most impressive individual performance evaluation systems (a.k.a appraisal system). Obviously my strategy would draw a lot out of what existed there. Add to this, practices which my more illustrious friends have been a part of in their organizations and we should have something which is goal oriented and rewards people on their performance in meeting those goals, their innovation in performing high value activities and convergence of their goals with that of the organization.

So in a nutshell, what does a individual performance management system do to your org.

Instill confidence in the people about their capabilities (flip side help people identify their weaknesses and work on that)
Make the system relative and objective (subjectivity cannot be ruled out completely though)
Ensure that superstars are distinguished from the rest (recognize and reward)
Motivate and give a sense of direction to the real assets of a company (a.k.a people)
Instill confidence in the upper management about the capabilities of the company (yup this has a flip side too)

There is a lot more to the list above, lets just leave the rest for me to discover, which I would in due course, once this system as they say in product lingo goes RTM.

Creatively destroying myself!!

Tue, 08 Feb 2005 05:05:38 GMT

With the pace things are moving at , it's no lame task to be continuously on a journey to learn and evolve, otherwise you run the risk of going obsolete. This is a lesson I have learnt the hard way, as I try to catch up with the latest technologies in the IT space. What strides Microsoft has made in the Web Application development sphere, with the .Net framework.

Building n-tier applications couldn't get any easier, of course there are other issues of performance and scalability to consider as well, cause the world population isn't getting any lesser(6.5 Billion nearly).

As I read in the McKinsey Quarterly recently, there is a constant need to embrace the forces of "creative destruction". Their article was for corporations which fail to match the dynamism of the markets , and run the risk of being un-prepared for the apocalypse.

Creative destruction means to continuoously transform your thoughts , processes, methodologies to keep pace with the markets, cause as an old saying goes "The markets will always out perform even the most profitable of conglomerates".

I could probably extend that thought to human beings as well. Each of us knowingly or un-knowingly is creatively destroying himself, evolving again, destroying..the cycle goes on. Those who fail to embrace creative destruction, run the risk of being wiped out of the sphere of life for good, much like large corporations which have been wiped out over the past.

Thats that..and so I need to get back to creatively destroying myself. Cheers !!

The Indian acquisition of China

Sun, 30 Jan 2005 01:33:14 GMT

An article which I read in the McKinsey quarterly brought out some interesting facts about the Chinese IT Industry, and whether it could pose a threat for the Indian software-outsourcing industry. These comparisons are only natural because China and India have been projected as the next economic giants and global market forces. So let me draw out the facts in this comparison:

China: Growth in China's IT Industry is driven by domestic demand, mostly local corporations who want language customization for software, foreign-software-outsourcing accounts for 10% of the $6.8 Billion in revenues.

India: Foreign-software-outsourcing accounts for 70% of the $12.7 Billion in revenues. Clearly we need to ramp up on the domestic demand for software, even if it is something as meager a task as language customization, and the not so meager task of taking IT to the masses across the country(villages,zila parishads you name it!!)

China: Has about 8000 software-services companies, 75% have fewer than 50 employees.

India: Has fewer than 3000 software-services companies, about 15 have more than 2000 employees and companies like INFY, WIPRO and TCS put together have approx 121,000 people on it's rolls.

China: Only 6 of 30 largest companies are certified at CMM L5 or L4, and the rest feel the efforts for CMM certification weren't necessary or worthwhile

India: All of the 30 largest companies are CMM L4 or L5 and continuously work on other frameworks like CMMi,PCMM, Malcom Balridge and Six Sigma.

The Chinese people who I worked with in the US are the most intelligent and hardworking people and on some counts(like analysis and design) I would say far superior to Indians. So the above comparisons just fox me, because China certainly has the talent pool available, I guess they are not able to come together to merge the large number of entities into one.

But an interesting thought is that the Indian companies have the muscle to buy out the chinese companies, thus nipping the competition in the bud and in fact using it to their advantage. So would we see increased incidences of M&As of Chinese IT companies by the Indian companies?

Surveys and rankings: Real or just a number game.

Sat, 11 Dec 2004 17:28:25 GMT

Today’s economic times carried a report of India's best employers; a survey carried out by Hewitt Associates, an HR management company (http://economictimes.indiatimes.com/articleshow/msid-954858,curpg-1.cms). Interesting to note that Infosys Technologies Ltd does not figure even in the top 25.

With so many of these business magazines doing these surveys these days, it has become difficult to comprehend which one is the most authentic. In the recent past, Infosys topped the survey on "India's most respected companies for 2004" and was ranked 20th in "Great Places to work in India in 2004". Incidentally both these surveys were carried out by Business World. Hewitt Associates is the partner of choice for Business Today in such surveys. But on retrospection, is it possible that a company which did so well on the earlier surveys, being among India’s most respected and one of the great places to work, is not India’s best employer. This foxes me no end, and even though I trust the Hewitt survey more than the other two, I really don’t know what to consider authentic. Mind you, Infosys has been ranked as number 1 by the Hewitt business today survey in the past. So what went wrong this time, something to question the HR (or PR) team in the next all hands meeting I’d say.

With volume distribution the key here, I guess these survey's merely add as gimmicks to increase the number of copies sold, as every one is ranking and number crazy here. About 10 yrs ago there was a hindi music show on TV called "Superhit Muqabla" (Superhit contest), which became a rage among the viewers. Even before the TV era , there was a radio show called Binaca geet mala (later renamed as Cibaca Geet Mala or Cibaca Song necklace) which had a popular voice of radio Ameen Saini, hosting the countdown to the top 10 songs in the country. Both these shows attracted the maximum advertisement revenue for the channels.

I guess the magazines have taken the cue from these shows, and rankings have become a popular mechanism to boost their sales, because distribution channel costs remain constant. So very soon there would be another ranking for B-Schools followed by Engineering colleges, followed by Arts and Science colleges et. al.

So is this just a number game or can a ordinary citizen trust these rankings. As Shahrukh Khan (India's supposedly number 1 movie actor) once commented on being asked how it felt to be number 1,"Only telephones have numbers, actors have feelings".

Reliance-The growing rifts and uncertainty

Thu, 09 Dec 2004 04:50:11 GMT

It's funny how yesterday morning I read that the Ambani brothers are closer to calling truce(http://economictimes.indiatimes.com/articleshow/950931.cms) and the yesterday evening headlines on economic times suggest that the brothers have again started questioning the ownership issues and other gory details which have led to split up of business umpires before.(http://economictimes.indiatimes.com/articleshow/952056.cms)

The press too has a big hand to play in all this , they get the pun out of creating smoke where none exists.

In all cases, this more than highlights the point that it really cannot work in a family setting when the business grows to tunes of billions of $s. Consider this Dhirubhai Ambani's family including his brothers once owned considerable stake in Reliance. He choose to buy out their entire stake at many times the actual cost, because he knew the potential that Reliance had and probably that a family feud is also possible if things grow too big and out of control for Reliance. It remains how the Stanford and Wharton graduates will call truce in this battle for India's largest privately held company.