IBM’s Business Transformation

Business Week writes about IBM’s focus on business transformation services: “BM, with its legions of PhDs and closets full of patents, is not built to duke it out with the likes of Dell. Palmisano’s strategy promises a neat escape. Instead of battling in cutthroat markets, he takes advantage of all the low-cost technology by packaging it, augmenting it with sophisticated hardware and software, and selling it to customers in a slew of what he calls business transformation services. That way IBM rides atop the commodity wave — and avoids drowning in it.”

Emergence Effect

Kevin Werbach nicely summarises what we are seeing around us: “Something that gets me quite jazzed these days is the way so many innovations are linking up and leveraging one another. It’s not just, ‘hey, check out that cool company!’ Blogs, search-based innovations, tags, and so forth allow both new startups and established platforms like Google, Amazon, and Yahoo! to build on one another. The emergent whole is greater than the sum of the parts.”

The Costs of Long Tail Businesses

Kevin Laws writes that “when individual transactions are very small, non-monetary costs dominate.”

Chris Anderson of Long Tail fame recently posed a question in a post on the economics of abundance: what happens when it costs almost nothing to produce and stock one more item?

One surprising result is that non-monetary costs dominate the transaction. Most of you are familiar with monetary costs – pay $0.99 to download a song from iTunes (or $0.10 from AllofMp3). However, as the monetary costs fall, the most important impediments to a transaction are non-monetary: search costs and psychic costs.

It is not enough for a company to aggregate lots of small things. Reducing search costs by matching content to users is critical for Long Tail businesses.

Psychic costs measure the stress of having to think about a transaction.

TECH TALK: When Things Go Wrong: The Journeys Pitfalls

As an entrepreneur, I have made more failures than successes. And that is probably true for most entrepreneurs. No one starts contemplating failure, but for various reasons, failure ends up being an integral part of the terrain. So, dealing with failure becomes an important challenge for entrepreneurs one that decides whether they work towards eliminating their errors and redoubling their efforts to succeed, or they quit the field and take up employment elsewhere.

When things go wrong, the only person who can set things right is the entrepreneur because it is the entrepreneur who knows why the business got there. Unlike professional managers who can leave (or get fired) if things dont work, an entrepreneur cannot walk away. The battle has to be fought and won. There is no escape route. Entrepreneurship is a one-way street the only way is forward. And that is what makes it so exciting. Ask entrepreneurs and they will gladly tell you that theyll do it again. Entrepreneurs think that they will succeed even through the odds are stacked against them. The story of entrepreneurship has more failures than successes and yet this is a reality that no entrepreneur will accept!

When things go wrong for entrepreneurs, it is a time for deep introspection and action. This Tech Talk series is about those difficult times. I have experienced more than a handful of such periods. Each is like a crucible experience. When one is going through that challenging patch, it is hard to imagine how business and life could get better. There are few people one can talk to. At times, it is even hard for oneself to accept that the business is failing or has failed. It is like part of a train wreck that is happening in slow motion.

While entrepreneurs can take many steps to try and avoid failure, one needs to accept that failure is part of the game. Things will and do inevitably go wrong. That is the path the entrepreneur treads on by choice. Of course, one does not naturally set oneself up for failure. But, inevitably, failure happens. A wrong decision, a series of seemingly inconsequential actions, an external event it could be anything that can cause a business in its early stage to land into trouble.

While one can argue that it is the entrepreneurs errors which have caused the situation, one needs to also look beyond that. It is also times like these that bring out the best in some entrepreneurs. This is what, as they say, separates the men from the boys. These are the situations which are like a trial by fire for the entrepreneur provided the trying times can be tackled. It is rare to find an entrepreneur who doesnt have stories about the difficult times. More often than not, we try and forget about them like a bad dream. But these times are not easy to hide away in memories. For anyone who has gone through them, these are the days when all one can think of is negativities and collapse. And yet, one has to deal with the situation one day at a time, one event at a time.

Tomorrow: My Failures