Strategy - my take on Porter II

Porter 5 forces model for analysis of 'industry', as I mentioned in the previous post has been widely acclaimed and acknowledged, though there are some gaps which make the model less than good for all purposes of application.

Firstly, Porter fails to mention what constitutes an industry. This definition of industry can however can be adopted quite well from the concept of 'strategic groups'.

Secondly, as Porter mentions about the threat of substitutes, he fails to objectively provide any framework for assessing the 'extent of substitution' to be considered. Also, though Porter gets into depth of determining importance to be assigned to substitutes based on price-performance levels, he fails to capture the dynamicity of 'substitute products' i.e. a distant substitute of today can be a more direct threat in the future and vica versa.

Thirdly, entire Porter's model fails to consider the 5 forces from a constantly changing level. A 'scenario planning' tool used by Royal Dutch Shell is the only currently widely accepted tool for aid in developing strategies based on future possible scenarios.

Fourthly, Porter's model tends to serve only at the 'firm' level ( to be more precise..for individual product / specific product business unit) but is not replicable at the Corporate level. This limits its use for most of the companies in today's world as they are in more than products.

Last but not the least, though Porter's 5 forces model takes encapsulates 'substitutes', on prima facie atleast, there is no mention of 'alternatives' which pose a significant big threat compared to substitutes. An 'alternate' as I define, is an outright change/ vanishing of a particular need of the consumer, either voluntary or not. A complete ban by the government on the tobacco products / liquor products would be a case on involuntary alternative of 'no tobacco/ liquor'. Also, the evolution of alternates creates markets for new and innovative products.

PS - I know its kind of boring to have 3 posts on the subject of strategy...no more strategy now...porter ki kasaam

Strategy - my take on Porter

Porter with his 5 forces model made a lasting impact on the approach towards strategy formulation. His earlier writing regarding IO approach, competitive strategy and competitive advantage have also been well accepted across the academia and industry for quite many years now.

However, there is a significant extent of eclectism among the various theories propounded by Michael Porter, though the same can be said to be consistent with balanced pluralism in terms of drawing from basic economics.

Porter chooses to conceptualize the 'firm' in different ways depending on the actual purpose of its utilization. He conceptualizes 'firm' in the context of 'Production function' when trying to grapple with industry level phenomenon. He uses it as a 'Value chain' when trying to grapple with firm specific sources of competitive advantage and as a repository of knowledge and 'innovating entity while constructing his diamond framework.

Unfortunately, though the integration remains on the levels of loose framework and an absence of any attempt whether his above stated different theories are compatible at deeper levels.

Porter also fails to provide any agruments that the basic IO is consistent with industry evaluation nor does he draw on any basic research.

The underlying resource endowments that allows firms to carry out their strategic plans are not seriously analyzed, and an analysis of how and why the specific resource endowment should be there is missing from Porter writings.

Though there aren't as well accepted models in the field of strategy as that of Porter's, focussing only on what I may take the liberty to call ' a figment of Porter's imagination' underlines the need for a more balanced and integrated approach to the subject and practice of strategy.

someone listening....????

PS - Strategy is not an art. Neither is it a pure science. They say its an assortmenet of different streams, but I differ. It is still a concept, a figment of one's imagination. And accepting someone's imagination ( read Porter's) indicates lack of imagination on the part of strategist.

Rest ALL is strategy

There aren't many things in this world which have the potential to piss me off. But our class sessions in the strategy course are an exception. I enter the class with a clear perspective and many specific questions. I come out with a more confused outlook and unanswered questions. I wonder how can one be so flawed in data, eccentric in reasoning, untouched by reality, erroneous in approach yet conventional in ideas. I wonder how can one be so superficial in understanding the basics of some well debated articles, yet take the articles on its face value and not objectively evaluate it. I wonder how one can speak with so damn confidence though his statements are based on nothing but intuitiveness rather than following a particular approach, and the utter convictions shown during defending one's intuition have been rather exemplary, though unwarranted.

Management strategies haven't been drawn from models. The models have been based on successful strategies. However, till date academia has used lag indicators to assess the successful strategy. i.e. Once a strategy has resulted into success ( read success in financial performance), then its is ATTRIBUTED to a no. of factors such as company's strategy, leadership, work culture and other crap. But our artful learned writers intentionally and at times unintentionally, tend to write as if this factors have contributed to success ( in terms of financial performance). This HALO EFFECT ( dekha....i know OB, though I missed the top grade by a fraction of a mark) of judging whether a strategy and other factors were good or bad from the financial performance has created much disservice to the field of management. Cisco for example had heaps of praises about its work culture and strategy in the late nineties when its financial performance was good.. great leadership, great work culture, truly innovative, fantastic marketing strategy.. Come 2001..the financial performance dips ...The people who earlier defined its leadership as charismatic termed it arrogant, the work culture which was praised as innovation driven suddenly became 'uncontrolled chaos'..and so on, though nothing had really changed in Cisco's way of functioning. Analysts and theorists' ability to fit examples to their own intutive theories, which have been the result of their figment of imagination and skewed research, deserves a salute. Tata Motors was criticised in 2000 when it registered huge losses , but suddenly became the epitome of best practices for many business writers in 2004 when its financials improve. The so called learned writers are supposed to define what contributes to a successful strategy, but they in hindsight or at times intentionally rather evaluate the factors as 'good / bad' or 'successful/not successful' by attributing financial success to them.

Also, many a times people try to classify their strategy or rather force fit their strategy into a particular model to articulate it better. 40 years back some great genius said ' The only two ways an organization gains competitive advantage is either cost leadership or differentiation leadership. Over the next f*king 40 years, people came out a myriad of other ways of establishing sustainable competitive advantage, say penetrating distribution channels, focussing on a narrow group, innovative marketing, counter culture trends, quality focussed...but some idiots try to force fit all this strategies under the same headings of 'cost leadership' and 'differentiation leadership'....Seems as if the wave of making 'complex' things 'simple' has been overstretched too far.

And we bunch of idiots derive our understanding from such super idiotic stuff.....

Let clear thinking prevail. Amen !!

PS : That you are right and those Porter & party are wrong is not too strong an assumption to make, provided you first fully understand what Porter & party really meant ....

PSS : The only thing that matters is 'money today' and 'more money' tomorrow. 'Rest ALL' is strategy - the only thing I wrote in my diary in the last strategy class.

PSSS : oops...cudn't bring out all my frustation in French....( m yet to learn any French abuses..faculty ne sikhaya hi nahi inspite of innumerable requests)...but the next post for sure gonna be in French.....sacchi...

merci

An encounter with JJ

I didn't wanted to pursue the French course, for which self had registered at what I consider the 'dumbest moment of my life'. So, here's the conversation between me and the dean's secy (JJ) as I try to escape from this self invited torture of french classes.

JJ : Why didn't you attend the 'French' classes yesterday ?
Me: I had just registered for the course. But I hadn't paid the fees, so I thought my registration would be cancelled.
JJ : But I hadn't send any notice that your registration was cancelled
Me : But I also didn't receive any communication that my registration wasn't cancelled inspite of not paying the fees.
JJ : Why didn't you pay the fees in the first place ?
Me : I didn't have any cheques for paying the fees. I lused to live on cash.
JJ : okie....you may submit the cheque now to the accounts department. Hope you are having the cheque now.
Me : Sure madam, I do have a cheque now.. But I told you naa, I used to live on cash. So, I don't have any cash in hand now and no balance in the bank too.. How about paying the fees as soon as I get my first salary ( thats more than one year from now )
JJ : okie...i got it now....you may start attending the lectures... don't worry about the fees, but please be regular in your 'french' classes. Attendance is compulsory for it.

So, poor me is now forced to attend 3 hours of french classes, apart from my regular 6 hours of main course everyday.

Moral of the story : Never mess with a sec'y.... they are more smarter than you think.



and yes, my next post is going to be in french....vrai, je parle francais. bon jour
PS : I paid the fees today for the French course

Too much

They say I crib too much.
They say I talk too much.
They say I read too much.
They say I sleep too much.
They say I smoke too much.
They say I fight too much.
They say I write too much.

I say 'F.O...Its too much.'

title zaruri hai kyaa

The grind begins tomorrow. With 4 lectures per day and the pleothera of case studies I am soon going to be in 'eternally busy - dare u disturb' mode. I spend today's evening roaming about in sakchi and trying to catch a glimpse of the human civilization which exists beyond XL. My life at XL has been confined to my room for sleeping, the lecture hall ( yaa...for sound sleep), Dadu's for my daily dietary requirement and that corner room in the library wherein I spend long hours in the maze created by over 55000 books and umpteen other journals. I meet the same ppl., cribbing all the time, those fake laughs over inconsequential tidbits, those same mediocre discussions, those forceful smiles and smirks, those irrelevant pressues which we build on ourselves, those undeterminate urgency for assignments, those last moment rushes of adrenalin, those clumsy parties and all those unwarranted heaps of diplomacy. But somehow, I have started enjoying it. Though my quench for intellect has been less than satisfied, I have developed a sort of liking for this surrogate life. I continue to be in a flux regarding my beliefs on the relevance of this endeavour at XL.

Hope I'll soon cut through the clutter and clear thinking will prevail. Amen !!!

PS - I somehow exercised extreme control in the Strategy class yesterday when the faculty again raised the question ' What is strategy ?' No, I wasn't going to say it is bullshit..have already said it once...I have refined my answer to be more politically correct. It is 'Strategy is a concept. It is a figment of one's imagination.'

Shapeless Musings IV

I fell asleep ..again...Some fears that had been submerged within my ultra busy schedule returned again to torment me. Some haunting memories flashed through my mind as I woke up in a state of utter disarray. I clenched the shawl as hard as I could with my hands, but felt self to weak to cling on to it. I looked around and seeing myself in the same so familiar so known room breathed a sigh of relief as my heart sank into my stomach. I just felt like that nearby tainted bottle of water whom nobody in the first look, can make out whether its full or empty. I tried to reach out for the bottle, but it was too far for me to reach. I looked up at the ceiling. No, it wasn't falling down. My dear fan, now giving me a perplexed look had a thousand questions, but I just didn't have any answer. I looked at my laptop screen and the familiar sight of a few dozen offline messages did lend the 'much required now' routinous familiarity. I skimmed through non pertinent 'sms's on my cell but all urgency seem irrelevant to me. The dark sky artfully lended a deceptive hue to camouflage the early morning hours. I tried to cry out loud, but cudn't. I closed my eyes as hard as I can, but the haunting scenes were still gushing afresh. The chilling air made a way through my now clenched fists. I craved for warmth and grasped the shawl with all my strength. I felt the cold air brushing my toes, but couldn't help. The cringing sound of the door resonated in my ears, as it fought with the cold, trying to protect me. I kicked with all my life to get up, but in vain. Again I tried to cry, but may be the tears were freezed within. I went to sleep ...again...

I am waiting to wake up.. And they say...I need to wake up soon...maybe sooner.

Its three years now...and yaa..I have woken up now..ready to fight that cold without a speck of fear head on....Let the trumpets blow.

From 'Shapeless musings' ...written by self on 20th Jan., 05

Quote of the day

'Strategy is bullshit' - my first words in the first strategy lecture.. Hope they are not the last words in the last lecture.

Flush it.

My new year resolutions

With this New Year begins a new term at XLRI. The last term was an absolute nightmare. With the summer internship process, wherein I had the worst time of my life…( haan bhai haaan, I know …abhi aage bahut kuch aanewala hai), and made me even curse myself on the decision to join the best private B school of the country for a moment and doubt the fairness and genuineness ( I still do.. ) of the entire process, to the absolute crap work we bunch of idiots did during our marketing project. This marketing project when combined with the handicraft skills I developed during the more crappier and absolutely shit MAXI fair made me nominate self for the award of stupid of the year, but as always I lost. This year I lost hands down to the Pakistani media who garlanded late Benazir Bhutto as the role model of democratic ideals even after she mentioned in her will that she wanted her son ‘Bilawal’ ( nice name) to be heading her political party. Maybe, in Pakistan the party president isn’t elected, its done by the will of Party President. (In India, it’s not much different either). Last year I lost to CITU when it tried to bring the IT sector employees under its gamut. Unfortunately, the CPM Politburo didn't give much of a fight except during the mindless random ramblings on every god damn important issue for the country. All communists aren’t fools, but how come all fools are communists ???

I’ve also made few resolutions for the new year and for the new term such as to regularly get notes of my nice, loving, charming, adorable, beautiful, sexy, generous, intelligent, genius friends photocopied time to time. I am also going to keep motivating all my group mates in all projects to put in their best efforts towards doing a nice project ( hey….c…now I need to develop my f*king dipolomatic skills too.....). I have also decided that I will be definitely attending more than 75 % of the morning 8 30 lectures this term. ... .kuch jyada ho gaya naa...okie ..lets make it 60 %. I’ve also decided that I will be reducing my avg. daily expenditure at the Dadu’s by 25 %. I have already scored many a double centuries in the last term. And yaa, I am surely gonna reduce on my OMAXI dues (sacchhi…. okiee….maybe some flexibility permitted in this resolution). I am surely going to find sometime to entertain myself ( that doesn’t mean I find time to entertain others…hey....u ....c'mon not that way...u pervert) and treat myself to some bollywood flicks.. m yet to catch on OSO & Tarre zameen par…haan bhai, I m still damn busy ( pyaar aur padhai ke siwa bhi hazaar kaam hai zindagi mein). I will also be pursuing my interests in photography soon…so all you XL ki billiya…oops..I mean kudiyaan..get ready to get clicked. I also intend to switch from TOI to HT after pounding my head on the nearby wall while reading TOI as the standard of English therein has been off late been even worse than that on my blog. I wondered how a tennis player got injured on her ‘upper leg’…gosh…again... u're indeed a pervert!!! I never knew about this anatomically wonderful part which tennis players possess. The quality of language has been so abysmally low in TOI in recent times that even American friends can now find errors in it. I intend to further cut down on my chatting time. I’ve already stopped chatting on Gtalk except for the very special/ emergency purposes or special persons. With over 800 dear friends in my list therein and about 150-200 ready anytime to discuss with me wide ranging issues from the economic reforms in the animal husbandry of Rwanda to the impact of the subprime crisis in US on the tourism industry in Costa De Rica and even the unaddressed areas in the governmental program on rejuvenating the vanishing Bolivian dance styles to the effect of rise in coastal temperatures on the reproductive cycles of the sea turtles to the effect of excess SOx in flue gases on the reheater tubes in supercritical boiler to the changes in ADB funding guidelines for infrastructure projects, I find myself at little bit pressed for time ( yaa..just a little bit..you moron) for chatting with you. Also, I am gonna continue with the dubious distinction of being the only moron on campus who doesn’t use a cell phone.

This term I am having ‘Corporate Social and Environmental Responsibility’ as a subject. What crap…Turbulent times ahead in the lecture hall.

Hope you accomplish all your new year resolutions. Amen !

PS : I somehow missed to register myself for Term II. But will surely get self register for term III.