Managing Expectation in a fast growing high technology company

Venu Payyanur

As the organization grows, expectation of the stakeholders also grows, at times more dramatically than the business itself. Shareholders expect higher profitability and return on their investments while employees are looking for higher salaries and benefits. Customers demand the best product at the lowest cost with unprecedented levels of service and support. Balancing these conflicting demands and yet sourcing enough funds for investments for future growth is like tightrope walking. Authorities are looking for increased tax revenue and the company must also meet its corporate social responsibilities. Some of these are conflicting and difficult to manage. Let us evaluate each of these conflicting demands on the company management in more details.

Customers – Probably the most important segment of all who ultimately decides the success and failure of an organization. In a highly competitive market place when the customers have multiple choices to decide from, they can be extremely demanding. Customers are looking for products with most advanced technology at the lowest possible price and on-demand service and support, preferably free of cost throughout the life of the system. Companies have to constantly reinvent themselves to remain competitive and be successful as none can be the leader in all the three areas of technology, price and process/service.

Technology challenges – this is a double edged sword. Customers are always looking for products that give better results, faster, easy to use and smaller. But it must also be easy to learn and implement. Imagine the struggle many organizations have to face when they introduced computers for accounting or similar applications many years ago.  Besides maintaining ledgers manually for many months managements have also to confront aggressive trade unions resorting to strike fearing their jobs due to automation. Considering the rapid progress in technology, such challenges are magnified manifold more so when one is dealing with organizations working under regulatory controls such as pharmaceutical companies or food testing laboratories. Hence the challenge is on you to ensure that the users are successful in using the products and getting better than expected results without interrupting their day to day activities. This is like changing the tyres when the car is still running.

Price challenge – India is generally a highly price conscious market and we Indians enjoy hard bargaining whether we are buying high technology products or vegetables. If you are sales manager, you would have certainly heard these kinds of statements from your sales man

This is a Government customer and has a fixed budget. Therefore we must reduce the price to get the order.

This is a university customer and has very limited budget. However we will benefit in the long run as the students who use our system will become users or managers in due course of time and will buy our products. Hence we must take this order at any cost.

This is a big buyer and is planning to buy multiple systems this year and how can we ever miss such an opportunity. The customer prefers our product but if we do not meet his price expectations, the order will be taken by our competitor.

Ultimately it is up to you to decide whether it makes business sense to take the order at the price the customer demands or leave it, taking into consideration the overall internal financial guidelines and external market conditions. You may also feel that all the competitors are unreasonable and do not follow common sense business policies or else how could they offer such low prices and special prices to the customers when situation does not really demand such things!

Process/support challenges – when you describe a customer, who actually you are referring to? Is it the end user? Her Manager? The General Manager of the dept. or the Vice President of the Division? Or is it the Purchase Manager, Finance Manager, Vice President of Supply chain Management? Or is it someone at the “C” level executives such as the CEO, CFO, CIO, CTO, etc? The process and support challenges are unique for each of these groups and must be managed to ensure overall customer satisfaction.

If the end user is successful in using your product, she will always support you. Successful here actually means not that the equipment is working OK, it means the product/equipment gives absolutely trouble free operation and the results are better than expected, maximum uptime of the system and if ever there is a problem it is attended and solved at the shortest possible time and the support is excellent, effortless, less expensive and hassle-free. She is provided frequent trainings free of cost to improve her knowledge and skill sets and additional training programs conducted whenever there is attrition.

The purchase manager will take all the time in the world to decide and will also call you for discussions and negotiations for the nth time, but once the order is placed she expects the delivery yesterday! Forget the payment terms or delivery commitments in the offer!

The finance Manager expects maximum discount, 180 days credits without guarantee, and not to charge for freight and insurance! Warranty should be for the life of the system!

“C” level managers are looking for better return on investments, improving productivity and quality and saving in time and manpower. If your products can meet those expectations, you are the winner! 

Finally you need to sell your product, meet your company expectations in terms of margins and short and long term profitability targets!

Employees Expectations – Attracting and retaining highly qualified, skilled and experienced knowledge worker is one of the biggest challenges of a fast growing medium sized high technology company. In a growing economy, employment opportunities are easily available as existing companies are growing and new companies are being set up every day and they all need additional manpower. Though India is producing the highest number of graduates and post graduates, English speaking professionals, none of them are trained or skilled to meet the specific needs of any company or industry group. However those with two or three years of work experience become highly valuable and can demand 50% or more increase in salary for a switch and gets it easily. Because of our demographic structure where almost four generations of workers are in the industry, meeting every segments expectations and needs are another big challenge for any company management. Young, professionally qualified, below 30 employees are looking for highest “take home” salary, learning opportunity and fast career progressions. Those above 40 years need good salary, responsible managerial positions, stability and long term benefits such as pension, gratuity, superannuation, etc. 30% and above attrition levels have become common in many fast growing high technology companies and that has become a major impediment to sustain the pace of growth. Since employees have option and do get their way today, many do not think about the future.

Why is Indian economy growing today? It is mainly because the labour is cheap here! Multinational companies transfer their work to India as they are able to get their job done at equal or acceptable quality levels at a fraction of the labour costs in the USA or Western European countries. But at the current rate of increase in salary and benefits, we will certainly loose that advantage very soon, in the next 10 to 15 years’ time! In many high technology companies the salaries would have gone up by more than 5 times in the past 10 year! Few cases even more than 10 times! While the salary increase in developed countries have stabilised to less than 2% a year! Since every company needs experienced and competent employees to sustain their growth, the management succumb to the pressure today but may be they are mortgaging their future opportunities!

Share holder expectations – one can keep arguing as to who is the most important stake holder of the company. Some will say it is the customer, as without the customer no company can grow! Some will say it is the employees as they are the group that runs the organization! But we all forget that without the shareholders, there is no company! And therefore they are the most important stakeholder and must be taken care of properly by ensuring that the market value grows year after year and dividends are paid out regularly. Growth in share prices are depended on EPS (Earnings per share) and therefore the company management must ensure that there is constant growth in the absolute and percentage profits of the company! To increase profits one must increase revenue, increase gross margin and reduce expenses. Increase in revenue can only be done by selling more to the existing customers or finding new customers or new markets. In a competitive environment, margins are always under pressure and your managerial ability is always under question when the gross margin is in the decline! For many high technology companies, the salary and travel forms the biggest percentage of expenses and is always on the increase! As a CEO of such a company you will be doing a tight rope walk in balancing the demands of all the important stakeholders of your company!

Government, central/state/local – every one of them is looking for additional revenue whether it is for developmental purposes or other purposes. Every company have to pay Income tax, central excise, central sales tax and state sales tax, service tax, entry tax, octroi, customs duty, etc for all of their business transactions. There is also professional tax, ESI, provident fund, shops and establishment tax, factory licence, environmental clearance, you name it and we have it. If you delay or miss making any payments on time then you end up paying a heavy penalty for such a lapse and at times you get a feeling that the authorities are waiting in the wings to catch you the moment you get something wrong rather than help you do everything right!.

Corporate social responsibility – this can be interpreted in many different ways! It includes meeting the expectations of all the large political groups, small groups and sub groups, meeting the expectations of various religious groups for their festivals or construction of places of worship, and many more! All need money for their activities and you may get into troubles if you ignore their regular demands.

As a Manager of a fast growing high technology company, your success is in meeting or exceeding the expectations of all these stakeholders  and as you can see, it is not always very easy as they are not complimentary!

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Managing Fast Growing High Technology Companies

Venu Payyanur

Never in the history of India, we experienced such dramatic growth in our economy resulting in the creation of millions of new jobs every year. This is both an opportunity and a challenge. Management of high technology companies are fast paced, complex and highly risky. Success requires skills and abilities that are very different from those required in other industries and other economies, because high technology business in a high growth economy has some very unique challenges. There are many Indian start-up companies as well as subsidiaries of large multinational companies operating in India in these technological and business spaces struggling to manage the growth and survive, even though the external environment and market conditions are conducing for their growth.

All high-technology businesses are based on a set of underlying technologies. These technologies are usually complicated and they advance rapidly. They must be planned, developed and replaced. High technology executives have to understand these technologies in order to make the appropriate judgements and decisions. This skill set adds a challenge that executives of non-technology companies do not need to manage.

High technology companies are typically high growth companies, particularly in a growing economy like India. But managing growth is a precarious act. If a company grows too fast, it risks getting out of control, if it does not grow as fast as competitors or expectations, it risks becoming a loser. When a business grows too fast, the resulting strain on management processes, organization and systems can be tremendous. Management capabilities must grow and develop as accompany grows. It is easy to manage when the company doubles in size in 7 years but not in two years like what is happening in India. Rapidly growing companies quickly exceed the capacity of their managers and often suffer from ineffective management in key positions, high turnover and lack of continuity as they continually bring in new managers with inconsistent approaches and experiences.

The high levels of technical and market uncertainties that characterize high technology product or services marketing have resulted in shortened product life cycles, collapsing markets and rapidly declining prices. Short product life cycles require that emphasis be placed on having the right products at the right time. Successful executives know they need to “manage” their future or it will manage them. This means proactively understanding tomorrow’s markets, forecasting changing customer preferences, anticipating potential competitive offerings, interpreting the impact of emerging technologies and defining the strategy for future products. Conventional strategic analysis tools such as SWOT analysis, Michael Porter’s industry structure analysis model and product positioning matrix, etc. by themselves are inadequate for developing comprehensive marketing strategy for innovative high technology products and services.

The increasingly rapid dissemination of new technologies and the continual change, both of which require constant adaptation, are a challenge for society as a whole. Innovation is a precondition for an SME’s growth, employment and competitiveness. In the era of globalization, SMEs play an important role in the overall growth of the economy of India.

The challenges being faced by the managers of medium sized high technology companies based in India are many fold whether they are in the area of human resource management, technology management, marketing and sales management, customer management and  managing growth.

Managing growth – most companies experienced on an average a compounded annual growth rate anywhere between 30 to 50% during the past 10 years. While this is exciting, the associated challenges of creating systems and processes, talent management, market management, human resource management, etc. are humongous.

Marketing and sales management – with fast growing opportunities and market growth company’s ability to address all the market segments become difficult. Equally challenging would be the threat from new entrants who are eager to take share from the market already developed and established by the leaders in the field. How to protect share from the existing market and expand reach to new market is one of the biggest challenges being faced by the management team of such companies.

Technology management – high technology companies are known for introducing breakthrough or disruptive technologies faster than well-established larger organizations. This is very exciting as well as equally challenging. Users of existing product/technology may be just getting used to that and in many cases may not be willing to change to a new product, even if it means cost or time saving in their operations. In some cases there could be regulatory controls such as in the pharmaceutical industry. Being a highly cost conscious society Indian customers  also show resistance to change due to cost of new acquisition while the existing product or technology is not fully utilized or cost not recovered.

Human resource management – probably this is the biggest challenge. High technology companies need highly qualified and talented manpower to manage most of their technical functions in R&D, product development, manufacturing, marketing, sales and customer support. In some cases special skills, knowledge or talent is needed, which is very difficult to acquire. Since most companies are growing and new companies are coming up every day, the demand for specialized manpower is high but the supply very limited. This leads poaching and artificial rise in salary and compensation that could impact the profitability of the company in the short as well as long run. Managing 30% or more attrition levels are challenging in any company more so in a high technology company. Education systems in India currently do not support some of the human resource challenges when it comes to modern technology. In many cases the knowledge and expertise available to effectively utilize the technology is not available within the users and neither the suppliers have adequate resources to educate and train the entire potential customer base.

Attracting and retaining highly qualified, skilled and experienced knowledge worker is one of the biggest challenges of a fast growing medium sized high technology company. The cause of India’s talent management dilemma is in many ways tied to its most valuable asset – a national demographic where more than half the country’s population (54%) is under 25 years of age, and 60% of people in the workplace are between the ages of 15 and 59. With four generations in today’s workplace, most companies are struggling to create an employee experience that appeals to individuals with diverse needs, preferences and assumptions. Although India is home to nearly 500m young, mostly English-speaking workers, finding the right talent to meet the high technology industry’s immediate and long-term needs is proving difficult. This is especially true in light of the fact that large numbers of college graduates prefers to pursue careers in the more lucrative salaries offered in software development and information technology.

Managing expectations – all stake holders of the company keep raising their expectations year after year. Customers want better product and support at a lower cost, shareholders want better return on their investments, employees wants better salary and pay packages and better work life balance, authorities are looking for increased tax revenue and the company must also meet its corporate social responsibilities. Some of these are conflicting and difficult to manage.

Even though the general perception is that in a growing economy every company grows is not true, even if one is operating in the most admired high technology sector. There are multitudes of examples of once successful companies closing shop or lagging behind late entrants in India. Even companies operating in same technological sphere with similar or equivalent products or services shows contrasting growth stories is certainly an interesting scenario in India.

Fast growing business needs dynamic leaders with vision and commitment to manage the growth and take it to the next level and we see a scarcity of such leaders in the Indian market. Leadership roles are thrust into young professionals who do not possess adequate knowledge and experience and are struggling to cope with increasing demands on their competence and capability. Aspiring managers must understand the dynamics and complexities of managing fast growing high technology companies in India and be able to create applicable strategies and prepare action plans to execute those strategies effectively.

Preliminary studies indicate the following deficiencies and requirements for Indian managers in the fast growing high technology sector.

Vision – a leader with vision has a clear, vivid picture of where to go, how to reach there and what success looks like when you reach there. They must also be able to share and communicate the vision to the entire organization. Set high expectations, even unrealistic at times, and demonstrate personal commitment and involvement in achieving the same.

Execution – creating a strategy is probably the easiest thing for someone with reasonable knowledge in management, economy and markets. And most companies operating in the same space have similar strategies too. But what makes one company more successful than others is their ability to execute the strategy well. Execution is a systematic process of rigorously discussing how’s and what’s, questioning, tenaciously following through and ensuring accountability. It includes making assumptions about the business environment, assessing the organization’s capabilities, linking strategy to operations and people who are going to implement and linking rewards to outcome. Leadership without the ability and discipline of execution is incomplete and ineffective.

Managing change – as the scale and scope of business increases every day, change becomes inevitable. Change management is defined as the continuous process of aligning an organization with its marketplace and doing it more effectively and responsively than its competitors. The key management levers, strategy, operation, culture and reward must be synchronized and aligned continuously. The biggest challenge would be to adjust your own management style and approach.

Team building – attracting and retaining the best talent available and investing in their continuous development is fundamental to any organization’s success and growth. Even with a billion population, you will find it extremely challenging to get the right candidate for the job and once you hire a person, train him to be successful; he is already on the lookout for the next job. Attrition levels are amazingly high, as high as 40% in many organizations and the old concept of lifelong employment is passé when you have multiple opportunities to choose from. Once you have assembled the team, motivating, instilling a sense of purpose and getting the job done is the next step. Generally people are capable of remarkable achievement if they are provided with the right work environment and collaborative leadership.

Managing expectation – as the organization grows, expectation of the stakeholders also grow, at times more dramatically than the business itself. Shareholders expect higher profitability and return on their investments while employees are looking for higher salaries and benefits. Customers demand the best product at the lowest cost with unprecedented levels of service and support. Balancing these conflicting demands and yet sourcing enough funds for investments for future growth is like tightrope walking.

Besides the above, every business leader must develop certain fundamental traits to be successful such as Business acumen, managerial courage, integrity and trust, composure, perseverance, humility and ethics & value.

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Vidharaniti – Part 3

Who is a fool?
1. He who is ignorant of scriptures, yet vain, poor yet proud, and who resorts to unfair means for the acquisition of his objects, is a fool.
2. He who, forsaking his own, concerns himself with the objects of others, and who practises deceitful means for serving his friends, is called a fool.
3. He who wishes for those things that should not be desired, and forsakes those that may legitimately be desired, and who bears malice to those that are powerful, is regarded to be a foolish soul.
4. He who regards his foe as his friend, who hates and bears malice to his friend, and who commits wicked deeds, is said to be a person of foolish soul.
5. He who divulges his projects, doubts in all things, and spends a long time in doing what requires a short time, is a fool.
6. He who do not perform the “Sraddha” for the “Pitris”, nor worships the deities, nor acquire noble-minded friends, is said to be a person of foolish soul.
7. That worst of men who enters a place uninvited, and talks much without being asked, and reposes trust on untrustworthy persons, is a fool.
8. That man who being himself guilty cast the blame on others, and who though impotent gives vent to anger, is the most foolish of men.
9. That man, who, without knowing his own strength and dissociated from both virtue and profit, desires an object difficult of acquisition, without again adopting adequate means, is said to be destitute of intelligence.
10. He who punishes one that is undeserving of punishment, pays homage to persons without their knowledge, and waits upon misers, is said to be of little sense.
11. These seventeen persons are considered fools.
a. he who seeks to control a person that is incapable of being controlled;
b. he who is content with small gains;
c. he who humbly pays court to enemies;
d. he who seeks to restrain women’s frailty;
e. he who asks him for gifts who should never be asked;
f. he who boasts, having done anything;
g. he who, born in a high family, perpetrates an improper deed;
h. he who being weak always wages hostilities with one that is powerful;
i. he who talks to a person listening scoffingly;
j. he who desires to have that which is unattainable;
k. he who being a father-in-law, jests with his daughter-in-law;
l. he who boasts at having his alarms dispelled by his daughter-in-law;
m. he who scatters his own seeds in another’s field;
n. he who speaks ill of his own wife;
o. he who having received anything from another says that he does not remember it,
p. he who, having given away anything in words in holy places, boasts at home when asked to make good his words, and
q. He who strives to prove the truth of what is false.

General Topics

1.  The following persons do not get sleep.

  • Thief,
  • a lustful person,
  • person who has lost all his wealth,
  • person who has failed to achieve success,
  • The person who is weak and has been attacked by a strong person.

2.  Great fear springs from these three crimes, viz., theft of other’s property, outrage on other’s wives, and breach with friend.

3.  These three, besides, being destructive to one’s own self, are the gates of hell, viz., lust, anger, and covetousness

4.  These three should never be forsaken even in imminent danger, viz., a follower, one who seeks protection, saying,–I am yours,–and lastly one who has come to your abode.

5.  These four that are calculated to remove fear, bring on fear when they are improperly performed, viz., the Agni-hotra, the vow of silence, study, and sacrifice (in general).

6.  These five should be worshipped with regard by a person, viz., father, mother, fire (proper), soul and preceptor.

7.  By serving these five, men attain great fame in this world, viz., the gods, the Pitris, men, beggars, and guests.

8.  These five follow you wherever you go, viz., friends, foes, those that are indifferent, dependants, and those that are entitled to maintenance.

9.  The six faults should be avoided by a person who wishes to attain prosperity, viz., sleep, drowsiness, fear, anger, indolence and procrastination.

  1. These six should be renounced like a splitting vessel in the sea, viz., a Guru who cannot expound the scriptures, a priest that is illiterate, a king that is unable to protect, a wife who speaks disagreeable words, a cow-herd who does not wish to go to the fields, and a barber who wishes to renounce a village for the woods.
  2. These six qualities should never be forsaken by men, viz., truth, charity, diligence, benevolence, forgiveness and patience.
  3. These six are instantly destroyed, if neglected, viz., Cows, service, agriculture, a wife, learning, and the wealth of a fool.
  4. These six forget those who have bestowed obligations on them, viz.,

10. Model Behaviour for Individuals

  • Forgiveness
  • There is one only defect in forgiving persons and not another; that defect is that people take a forgiving person to be weak. That defect, however, should not be taken into consideration, for forgiveness is a great power.
  • Forgiveness is a virtue of the weak, and an ornament of the strong.
  • Forgiveness subdues (all) in this world; what is there that forgiveness cannot achieve?

11. What can a wicked person do unto him who carries the sabre of forgiveness in his hand? Fire falling on a grassless ground is extinguished of itself. And unforgiving individual defiles himself with many enormities.

12. Righteousness is the one highest good; and forgiveness is the one supreme peace; knowledge is one supreme contentment; and benevolence, one sole happiness.

13. There is nothing more conducive of happiness and nothing more proper for a man of power and energy as forgiveness in every place and at all times. He that is weak should forgive under all circumstances. He that is possessed of power should show forgiveness from motives of virtue; and he, to whom the success or failure of his objects is the same, is naturally forgiving.

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