Module 1 & 2

AMITY GLOBAL BUSINESS SCHOOL
ashishpillai@gmail.com
Drucker
What is the Logic of Business?
The Logic of Business Has Not Changed

Evolution of human needs Transaction to Selling to Marketing And now from Marketing to Relationships and Partnerships! The emergence of institutions of business
The ability to customise solutions

Increased complexity and competitiveness Enhanced coupling of national economies with each other Technology Movement of goods and people. Movement of Information!
Some Issues That Have Emerged

To be competitive globally even if you may be acting locally
To adapt to compressed life cycles

To harvest and use business intelligence
To remain proactive
A concern for the environment
A concern for the society..
The changes in the dynamics of business and the challenges that have emerged are not always manageable by all business organizations internally
In most cases, it is appreciated that it not only may not be possible but it may also not be worthwhile to try!
Why Outsource??!??!!
You are brilliant cook!! And You are getting married!!!
What would you choose. Cook yourself for a 1000 people and impress them Or engage a catering outfit????
So. Organizations have begun outsourcing

that either
they are unable to do

or in some cases they have chosen to do but not
themselves
What Could be the Reasons??

SMEs may not have managerial resources and over 95% businesses in India are SMEs Outsourcing for cost cutting Outsourcing for risk reduction Outsourcing to focus on core and critical activities Even in case of many large organizations, the outsourcing decision is an integral part of measures to increase competitiveness and achieve advantage
The Top Three Reasons

Cost Focus Access to global expertise
Please refer to the reading assignment sent on Feb 3
Outsourcing
The strategic use of outside resources to perform activities traditionally handled by internal staff and resources
A management strategy by which an organization outsources major, non-core functions to specialized, efficient service providers
Core Vs Non Core Functions

Core Functions: The functions the company was created to do Non Core Functions: Those functions that are peripheral in nature and a company has to do to ensure success in the market Try to differentiate between core and non core functions for the following examples:
Airtel Ford Microsoft A factory in Industrial area Mohali manufacturing auto components AGBS Chandigarh
The Need for Customer Solution Orientation

Customer Solution orientation is a business moving its focus from the products to the customer The increased customer centricity has made it mandatory for every organization to customer solutions providers But most still offer bundles of standardized products or services solutions
This trend is driven by both the customers and the suppliers, as well as by more general social and industrial changes
The Business of Consultancy
The Big 8 (Till 1987)

Arthur Andersen Arthur Young & Co. Coopers & Lybrand (until 1973 Cooper Brothers in the UK and Lybrand,
Ross Bros., & Montgomery in the US)
Ernst & Whinney (until 1979 Ernst & Ernst in the US and Whinney Murray in
the UK)
Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and
Deloitte & Co. in the UK)
Peat Marwick Mitchell (later Peat Marwick, then KPMG) Price Waterhouse Touche Ross
Source: Wikipedia
The Big 6 (1989 1998)

Big 8 became the Big 6 in 1989 when Ernst &
Whinney merged with Arthur Young to
form Ernst & Young in June, and Deloitte,

Haskins & Sells merged with Touche Ross to
form Deloitte & Touche in August

Source: Wikipedia
Consulting Vs. Counseling

We know consulting.. To Consult.. Whom.. Someone who we think can give advise that will work! Consultancy can be about strategy, processes, hardware, software.
Counseling is.. Professional guidance in resolving personal conflicts and emotional problems
According to dictionary.com.
Counsel
Advice, opinion or instruction
given in directing the judgment or conduct of another
Consultation
The act of consulting or conference
A meeting for deliberation, discussion or a decision
Does it (it should) tell you that counseling is done to improve the productivity or morale of the human resources
Performance Counseling
The process of improving employee performance and productivity by providing the employee with feedback regarding areas where he or she is doing well and areas that may require improvement
The Definition Should Tell You.

Performance counseling & personal counseling are different.. Performance counseling is a step in a process to keep the human resources fine tuned and performing optimally
Performance counseling is based on systematic performance evaluation and not on subjective assessments
It is then obvious that to be able to use performance counseling, companies need to have systematic HR policies & practices Think of some.
Consulting Proposals
If we are talking of writing proposals, we can assume that we are NOT talking of how a Deloitte or a McKinsey would write proposals Before proposals, let us discuss the application of SPANCO model in consulting. How do I as a consultant identify, suspects, qualify the prospects, how do I approach them, do you negotiate, how are consulting deals closed, how do you maintain an ongoing relationship?
Writing Consulting Proposals

For Institutions/Organizations For SMEs/Individuals
They will give you the format

They will provide background info They will expect a well researched proposal
Deliverables, Timelines and Costing are key

Every proposal will be tailor made, so no pre determined formats Explain and clarify Dont sound patronising! Deliverables & costing are obviously imp. but Stress ROI! Most dont, but make effort to show ROI or how you can provide value
Business Problem Solving The Process

1.
Define and Identify the Problem
2.
3.
Analyze the Problem

Identifying Possible Solutions
4.
5.
Selecting the Best Solutions

Evaluating Solutions
6.
7.
Develop an Action Plan

Implement the Solution
But When Does a Problem Become So?

A problem becomes known when a discrepancy is observed between the way things are and the way things ought to be. Problems can be identified through:
Comparative/benchmarking studies
Performance reporting - assessment of current performance against goals and objectives

SWOT Analysis assessment of strengths, weaknesses, opportunities, and threats Complaints Surveys
Step 1 Define & Identify the Problem

Go beyond the obvious, try to differentiate between problems and their noticed effects Jumping to Conclusions Vs. Digging for Facts Hard Data.. Sales data, financial statements, profitability data etc. Hard facts Soft Data Feelings, hearsay, grapevine, opinions, conflicts, behaviour etc. Recall all you studied in Research Methods, Market Research etc. And use the relevant tools.
Step 1 Define & Identify the Problem

Once the hard and soft data is in hand, sit with the client and brainstorm till you are able to:
A. Develop a Problem Statement: A statement that clearly
describes the current condition your group wishes to change

B. State the Goal: Stating the goals achieves congruence
between your thought processes and the clients. So effort is focussed
But it is Not That Simple!!! Analytical Thinking

in Addition to
Domain Knowledge
Will be Needed!
Analytical Thinking = Scientific Thinking
What is Scientific Thinking?

My Son is Unable to Score in His Maths Exams.. What do I do?
1.
Talk to him, discuss with the teacher and find out what could be wrong and ask him to practice more. Take him to an astrologer and make him wear the gem the astrologer suggests. Take him to a temple, get Jhaad Phoonk done and to be doubly sure.. Maybe sacrifice a goat.
2.
3.
The Scientific Approach to Thinking
Problem
Solution
Hypothesis
Analysis
Facts
Step 1 Ask Yourself

Is the problem stated objectively using facts? Is the scope of the problem limited enough for you to handle? Will all who read it understand the same meaning of the problem? Has the "desired state" been described in measurable terms? Do you have a target date identified?
Step 1 Caution!
Listen to the client! You may be right, but the customer is never wrong! His business philosophy may not match yours but please remember.. It is not your business! In meetings, be very careful how you present the identified problems You may have to make key people look bad!! Make sure that you know who the boss is! In many Indian SMEs, it may not be obvious!
Successful Completion of Step 1 is 90% of the Work Done!
Step 2 Analyze the Problem

In your syllabus, this is written as, -Finding Leading to Solution Development and Implementation!!! Please dont assume! Meet people up and down stream
Talk to people at all levels. Ask a lot of questions.

Formal meetings Vs. Informal meetings..
More research may be (in fact will be) needed!

Once you have results of your result, repeat all the talking and asking questions!!
Step 2 Analyze the Problem Ask

When was the problem first recognised or felt? What are the causes of the problem? What are the effects of the problem? What are the symptoms of the problem? How was the client dealing with the problem? What were the clients limitations in dealing with the problem?
Did the client make any error of judgment?

How much freedom have you been given to solve the problem?
Step 2 Analyze the Problem Thoughts

Usually, in India at least hiring a consultant by an SME is a step taken late Too late most of the times!!
They probably knew it, but were reluctant to change!

If the problem arose due to a lack of vision, they will find it difficult to see it when you present it to them too! Can your systematic, rational, cut and dried solution be an answer to questions which involve a very large number of variables that cannot be predicted or controlled? And what about intuition, gut instinct, risk taking, out of the box thinking? Can you do that with some one elses business?
Step 3: Identifying Possible Solutions

Find optional solutions than the solution Shortlist solutions and arrive at a list of two or three most optimum solutions or the one that seems best. Shortlist or finalize in close consultations with the client The client should be on board the final stages of decision making so that the client understands the logic clearly and owns the decision
Ask Before Finalizing a Solution.

Is the solution workable in relation to the problem? Are there any limits that the solution presents? When looking at the advantages and disadvantages, which are there more of?
Does the chosen idea live up to the standards of the decision criteria?
Are the facts and information gathered consistent with the proposed solution? Will the solution cost stay within the clients budget?
Step 4: Develop an Action Plan

An action plan is a chart that lists the tasks that need to be done and identifies who will be responsible for each, when and what action is necessary, where to start, and how. Divide the Solution Into Sequential Tasks
Develop Contingency Plans

List requirements, their sourcing and costing Develop a Timeline
Step 5: Implement the Solution

Are you presenting solutions only or implementing them too? Control is the key. Develop monitoring systems and keep an eye on deviations.
Be flexible and keep strategy responsive

Keep the client in the loop at every stage
Lets Recall Pricing of Services
Three Methods
Competition Based Demand Based
Cost Based
Issues in Pricing
PROBLEMS:
1. Small firms may charge too little to be viable 2. Heterogeneity of services limits comparability 3. Prices may not reflect customer value
PROBLEMS:
1. Costs difficult to trace 2. Labor more difficult to price than materials 3. Costs may not equal value
PROBLEMS:
1. Monetary price must be adjusted to reflect the value of non-monetary costs 2. Information on service costs less available to customers, hence price may not be a central factor ashishpillai@gmail.com
What is Value for Your Client?

Value is Low Price
Discounting Odd Pricing Penetration Pricing
Value is Everything I Want in a Service

Prestige Pricing Skimming Pricing
Value is the Quality I Get for the Price I Pay

Value Pricing Market Segmentation
Value is All that I Get for All that I Give

Price Framing Price Bundling Complementary
Pricing
Pricing
Results-based Pricing
As Consultancy Services are essentially

services, the principles of pricing services will apply here
Three Common Pricing Methods

Per Hour: Usually new or IT guys tend to prefer this Project Pricing: This method involves quoting a total figure for the whole budget and then arriving at a mutually agreed pattern of payments. Usually research projects, strategy based consultancy involving big clients etc Retainership: You are paid regularly and the client demands your services as and when a need arises. CAs, Financial Planners, Media Consultants..
Calculating Your Hourly Rate

Profit + Labour Costs + Overhead = Daily Fee Revenue
How Much Should I be Earning???

Decide upon a target in come per year. Let us say Rs. 10 Lac A typical consulting year will have around 300 workable days.. Subtract festivals, matches, vacations. 250
So.. You should be earning 1000000/250... Rs. 4000 a day!!!! And that if that is what your consultancy earns, obviously, what is yours will be not more than 3 to 5 lac!! Why???
Talent. Skill.. What is the

difference??
As Consultants You Will Do.

Consulting Training Research
What talents and skills will an MBA need to be good at these? How can we develop such skills and talents? What can an MBA student do to develop such skills and talents if the college is not doing anything that can help?
Most Times You Will Be Doing

Data Collection & Analysis Documentation of the outcomes Knowledge Transfer or Implementation
What Will it take to be a Consultant?

Conceptual knowledge
Knowledge and exposure to analytical tools & approaches Knowledge of various business scenarios
Knowledge of elements of the internal and external environment
Skills
People Skills Scientific Thinking
Problem Solving
Diplomatic Nature Marketing Skills

Module 1 &amp; 2

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AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

What is the Logic of Business?

AMITY GLOBAL BUSINESS SCHOOL

The Logic of Business Has Not Changed

The ability to customise solutions

AMITY GLOBAL BUSINESS SCHOOL

Some Issues That Have Emerged

To adapt to compressed life cycles

A concern for the society..

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

So. Organizations have begun outsourcing

they are unable to do

AMITY GLOBAL BUSINESS SCHOOL

What Could be the Reasons??

AMITY GLOBAL BUSINESS SCHOOL

The Top Three Reasons

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Core Vs Non Core Functions

AMITY GLOBAL BUSINESS SCHOOL

The Need for Customer Solution Orientation

AMITY GLOBAL BUSINESS SCHOOL

The Business of Consultancy

AMITY GLOBAL BUSINESS SCHOOL

The Big 8 (Till 1987)

AMITY GLOBAL BUSINESS SCHOOL

The Big 6 (1989 1998)

form Ernst & Young in June, and Deloitte,

form Deloitte & Touche in August

AMITY GLOBAL BUSINESS SCHOOL

Consulting Vs. Counseling

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

The Definition Should Tell You.

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Writing Consulting Proposals

They will give you the format

Deliverables, Timelines and Costing are key

AMITY GLOBAL BUSINESS SCHOOL

Business Problem Solving The Process

Define and Identify the Problem

Analyze the Problem

Selecting the Best Solutions

Develop an Action Plan

AMITY GLOBAL BUSINESS SCHOOL

But When Does a Problem Become So?

Performance reporting - assessment of current performance against goals and objectives

AMITY GLOBAL BUSINESS SCHOOL

Step 1 Define & Identify the Problem

AMITY GLOBAL BUSINESS SCHOOL

Step 1 Define & Identify the Problem

describes the current condition your group wishes to change

between your thought processes and the clients. So effort is focussed

AMITY GLOBAL BUSINESS SCHOOL

But it is Not That Simple!!! Analytical Thinking

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Module 1 & 2

Module 1 & 2