The Hindu Business Line : Identify the drivers of success strategy

The factors that make a company successful cannot be compiled simplistically in a `laundry list.' Reach out for this book if you want some guidelines to analyse right.

HIRING is particularly important for service firms such as Infosys, as their primary growth options are to increase billing rates or volumes to existing customers, and to attract new customers.

You'd find this observation of Andrew Delios and Kulwant Singh in a case study on Infosys included in Strategy for Success in Asia, from Wiley (www.wiley.com) . The book is part of the Mastering Business in Asia series, brought out in collaboration with the National University of Singapore.

"Most explanations for firms' success take the form of a list of resources, activities, functions, and environmental factors. Most of these are often unrelated, and some may appear to be almost random influences on business outcomes," notes the first chapter, and decries such a `laundry list approach'.

For, in that random collection of generic factors there may be many that are important to some extent in many situations, but collectively, they may not provide "a meaningful or rigorous explanation for business success in a particular context."

Returning to the Infy case that finds a place in a chapter on `strategies for profitable growth', Delios and Singh point out how companies have to increase the workforce before business is secured, sometimes even before specific clients or services are identified.

"A specific challenge for Infosys is that it suffers a 10 per cent annual attrition rate. Though this rate is among the lowest in its industry, attrition at this level increases pressures on hiring and training." Which explains why the company pays great attention to `recruiting, training, managing, and retaining talent', with emphasis on the best HR practices, even as the company provides `excellent working conditions'.

If that's a heart-warming success story to emulate, there are failures too, to watch out for. Such as how "Motorola lost significant sales of its popular new mobile phones in early 2004 because of product shortages caused by inadequate supplies of cameras fitted in these phones".

Or, how Sony and Nintendo suffered from delays every time they introduced a video game console "because of the inability of their partners to provide adequate gaming software."

Another case study is that of the `wafer fab' industry, on the fabrication plants that manufacture silicon wafers, used in the making of memory chips and microprocessors. "Wafer manufacturing is an extremely costly, technologically advanced, and exacting manufacturing process," informs the book.

"The typical leading-edge wafer fab in 2004 manufactured wafers 300 millimetres in diameter with circuit lines between 9 and 13 microns in width. A plant cost up to $2.5 billion in 2004, which amounted to about 2 per cent of the industry's total sales."

Though manufacturing equipment accounts for about 80 per cent of a new fab's cost, its productive life is short, because obsolescence sets in fast and prices fall rapidly after a `peak productive cycle' of 18 months or less.

One learns that production costs can fall by about a quarter per wafer when fabs shift from manufacturing 200 mm wafers to the 300 mm ones. "The key drivers of success are rapid debugging of the manufacturing process to meet quality standards, high plant-capacity utilisation, and quick time to market," analyse the authors.

Yet another case is that of Virgin Mobile Asia which entered the Singapore market with an aggressive and risqué advertising "to appeal to teens and young adults". But, less than a year after its entry, VMA pulled out of Singapore... To know why and more, you need to work out a strategy to get Delios and Singh by your side!

New icons for the Net economy

BRUCE Kogut's The Global Internet Economy, from The MIT Press (http://mitpress.mit.edu) compiles comparative studies about seven countries, viz. France, Germany, India, Japan, South Korea, Sweden, and the US.

In his introduction, Kogut poses two measures for consideration: One, `how much' - such as, "How much has the Internet economy contributed to a country's growth? How much does a country dominate the world Internet?"

However, "the `how much' question poses complex problems of measurement, as seen in the many efforts to resolve the so-called Solow paradox of trying to find the productivity effects of information technologies in productivity numbers," reasons the editor.

Therefore, he proposes a second question, "How different", to comprehend the Net as "a cultural and economic force that influenced the organisation and institutions."

What is intriguing about the Internet, as Kogut puts it, is that it connects individuals, who though still embedded in their local webs of friends and family, are able to participate in and influence wider transnational communities, a possibility that did not exist before.

Also, the Net opened up virgin competitive arenas, he'd add. Suddenly, a new economic space, unpopulated by existing firms, appeared in the midst of the existing economies!

"Once this space was `seeded', this new ecology resulted in competitive patterns that looked at odds with the historical institutions and practices in some countries."

Let me fast forward to chapter 6 by Srilata Zaheer and Radhika Rajan, titled Creativity under constraint: Technological imprinting and the migration of Indian business to the New Economy.' It begins with a heavy dose of statistics; such as, that there are close to 20 million cable TV subscribers and 38 million households with cable TV access, " who could potentially become Internet users", and that India has a 19.5 per cent world market share in the export of customised software services.

There is a compact `timeline' in the chapter, tracing key Government initiatives affecting software and e-business in India.

"Some of the more critical developments on this timeline include the creation of the Department of Electronics in 1970, with an explicit computer policy targeting software exports (India was the first developing country to do this)," write Zaheer and Rajan.

While discussing the change in the mindset, the authors observe that the end of the twentieth century saw a major cultural shift of "seeing entrepreneurs as heroes, entrepreneurship as a desirable career choice, and computer literacy as key to personal advancement."

Good read!

Tailpiece

"Since I couldn't lay my hands on the Half-Blood Prince, I settled for something at least half-good!"

"A photocopy?"

"No, I told my friend to read out the book over the mobile!"

Books2Byte@TheHindu.co.in

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