Have Breakfast... or...Be Breakfast!

An interesting management article from Dr.YLR Moorthi.

Who sells the largest number of cameras in India ?
Your guess is likely to be Sony, Canon or Nikon. Answer is none of the
above. The winner is Nokia whose main line of business in India is not
cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone
cameras. Now, what prevents the cellphone from replacing the camera
outright? Nothing at all. One can only hope the Sony’s and Canons are
taking note.

Try this. Who is the biggest in music business in India ? You think it is
HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that
play for 30 seconds) Airtel makes more than what music companies make by
selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service
provider with the largest subscriber base in India . That sort of
competitor is difficult to detect, even more difficult to beat (by the time
you have identified him he has already gone past you). But if you imagine
that Nokia and Bharti (Airtel's parent) are breathing easy you can't be
farther from truth.

Nokia confessed that they all but missed the Smartphone bus. They admit
that Apple's I phone and Google's Android can make life difficult in
future. But you never thought Google was a mobile company, did you? If
these illustrations mean anything, there is a bigger game unfolding. It is
not so much about mobile or music or camera or emails?

The "Mahabharata" (the great Indian epic battle) is about "what is
tomorrow's personal digital device"? Will it be a souped up mobile or a
palmtop with a telephone? All these are little wars that add up to that big
battle. Hiding behind all these wars is a gem of a question – "who is my
competitor?"

Once in a while, to intrigue my students I toss a question at them. It says
"What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get
the answer almost immediately. Sony defined its market as audio (music from
the walkman). They never expected an IT company like Apple to encroach into
their audio domain. Come to think of it, is it really surprising? Apple as
a computer maker has both audio and video capabilities. So what made Sony
think he won't compete on pure audio? "Elementary Watson". So also Kodak
defined its business as film cameras, Sony defines its businesses as
"digital."

In digital camera the two markets perfectly meshed. Kodak was torn between
going digital and sacrificing money on camera film or staying with films
and getting left behind in digital technology. Left undecided it lost in
both. It had to. It did not ask the question "who is my competitor for
tomorrow?" The same was true for IBM whose mainframe revenue prevented it
from seeing the PC. The same was true of Bill Gates who declared "internet
is a fad!" and then turned around to bundle the browser with windows to
bury Netscape. The point is not who is today's competitor. Today's
competitor is obvious. Tomorrow's is not.

In 2008, who was the toughest competitor to British Airways in India ?
Singapore airlines? Better still, Indian airlines? Maybe, but there are
better answers. There are competitors that can hurt all these airlines and
others not mentioned. The answer is videoconferencing and telepresence
services of HP and Cisco. Travel dropped due to recession. Senior IT
executives in India and abroad were compelled by their head quarters to use
videoconferencing to shrink travel budget. So much so, that the mad
scramble for American visas from Indian techies was nowhere in sight in
2008. ( India has a quota of something like 65,000 visas to the U.S. They
were going a-begging. Blame it on recession!). So far so good. But to think
that the airlines will be back in business post recession is something I
would not bet on. In short term yes. In long term a resounding no.
Remember, if there is one place where Newton 's law of gravity is
applicable besides physics it is in electronic hardware. Between 1977 and
1991 the prices of the now dead VCR (parent of Blue-Ray disc player)
crashed to one-third of its original level in India . PC's price dropped
from hundreds of thousands of rupees to tens of thousands. If this trend
repeats then telepresence prices will also crash. Imagine the fate of
airlines then. As it is not many are making money. Then it will surely be
RIP!

India has two passions. Films and cricket. The two markets were distinctly
different. So were the icons. The cricket gods were Sachin and Sehwag. The
filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans
who followed suit). That was, when cricket was fundamentally test cricket
or at best 50 over cricket. Then came IPL and the two markets collapsed
into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was
reduced to the length of a 3 hour movie. Cricket became film's competitor.
On the eve of IPL matches movie halls ran empty. Desperate multiplex owners
requisitioned the rights for screening IPL matches at movie halls to hang
on to the audience. If IPL were to become the mainstay of cricket, as it is
likely to be, films have to sequence their releases so as not clash with
IPL matches. As far as the audience is concerned both are what in India are
called 3 hour "tamasha" (entertainment). Cricket season might push films
out of the market.

Look at the products that vanished from India in the last 20 years. When
did you last see a black and white movie? When did you last use a fountain
pen? When did you last type on a typewriter? The answer for all the above
is "I don't remember!" For some time there was a mild substitute for the
typewriter called electronic typewriter that had limited memory. Then came
the computer and mowed them all. Today most technologically challenged guys
like me use the computer as an upgraded typewriter. Typewriters per se are
nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them
up in the morning? The answer is "alarm clock." The alarm clock was a
monster made of mechanical springs. It had to be physically keyed every day
to keep it running. It made so much noise by way of alarm, that it woke you
up and the rest of the colony. Then came quartz clocks which were sleeker.
They were much more gentle though still quaintly called "alarms." What do
we use today for waking up in the morning? Cellphone! An entire industry of
clocks disappeared without warning thanks to cell phones. Big watch
companies like Titan were the losers. You never know in which bush your
competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing
machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a
Polish joke telling machine to a telephone much to the mirth of Silicon
Valley ). Or will the competition be story telling robots? Future is scary!
The boss of an IT company once said something interesting about the animal
called competition. He said "Have breakfast …or…. be breakfast"! That sums
it up rather neatly.

—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management,Bangalore 

He is an M.Tech from Indian Institute of Technology, Madras

and
A post graduate in management from IIM, Bangalore .

What I've Learned: Once A Broke Student, Now A CEO

It's no secret that 18-year-olds have a supernatural ability to tune out anything that sounds too much like helpful advice. But somehow, something Betsy McLaughlin read in a magazine the summer after she graduated from high school stuck with her.

"It basically said that you are in charge of your own life and you need to make up a blueprint if you want to live the life you want," she says. The same day, she sketched out a plan.

Though she's now the chief executive of Hot Topic, a teen retailer with $720 million in revenue last year, McLaughlin, 47, still consults the life plan she drew up that summer day. It's taken her from paying her own way through college, into her first job and on to running a company with more than 600 stores. She carries it in her wallet to remind her of what life was like when she ate Top Ramen because it only cost 39 cents.

McLaughlin, who grew up in Orange County, Calif., says her parents never spoke about money. "We never had any family conversations about budgets. Anything I learned was solely because I moved out at 18 and had to support myself and pay for my tuition," she says.

When she moved out of her house, she didn't know how to balance a checkbook or boil an egg. The goals she set were borne out of desperation. "I didn't want to be broke forever," she says.

McLaughlin drew up five headings--Career, Salary, Assets, Health and Personal/Social--and set goals for herself at different ages. By 20, she wanted to own a car free and clear. By 25, she wanted to own a home. At 28, she wanted to put 5% of her income in a 401(k.) At 40, she wanted a new hobby.

She accomplished all of them because she learned how to compromise. To get out from under her car payments meant she didn't have much of a social life in college. To buy her own home meant that she couldn't have any credit card debt. But because she was committed to her plan, McLaughlin says she didn't resent sacrifices like forgoing vacations.

"I realized that I was making a choice. That by giving up 'X' I could do 'Y,'" she says.

She also honed in on details. "I knew my personal consumption rate of everything, even dumb things like how much electricity I was using. I didn't have any money, so I couldn't pay the bills unless I had a plan for what I was doing," she says.

But not even a plan as detailed as McLaughlin's prevented her from making mistakes in her twenties and thirties.

"From a financial standpoint, diversification is a huge lesson that I didn't learn until I was about 35 years old," she says.

At the time, she invested heavily in shares of Hot Topic because she believed in what she was doing and wanted to align her interests with those of her company's shareholders. "I never thought that there might not be a reason to put so many of my eggs in the Hot Topic basket," she says. "I wish that people had told me that this has nothing to do with what you believe in with your company, but from a safety standpoint you never want more than 50% of your net worth tied all in your company," she says.

The takeaway: Have a detailed, long-range plan. "Nobody else is going to do this for you so you better take charge of yourself," McLaughlin says.