Thursday, August 21, 2008

We Need Nuke - But for the Right Reasons

According the International Atomic Energy Agency (IAEA), Nuclear power plants provide about 17% of the world's electricity, about 75% of the electricity in France is generated from nuclear power, and in the United States, nuclear power supplies about 15% of the electricity overall. There are more than 400 nuclear power plants around the world, with more than 100 in the United States. Uranium, Plutonium and Thorium are the common fuels used in producing nuclear energy. However, there are problems with nuclear as an energy source. Mining and purifying uranium is still not a very clean process. Improperly functioning nuclear power plants can create havoc – ‘Chernobyl’ the infamous example. Spent fuel from nuclear power plants is toxic for centuries, and there is no safe, permanent storage facility for it. Transporting nuclear fuel to and from plants also poses some risk.
Recent advancement in technology has enabled mankind to reconsider this controversial energy source, especially in the light of surge in prices of coal and oil, and ofcourse, the environmental implication associated with power plants using conventional energy sources. Some of the cutting-edge fission reactors that are available today are much safer than ever, need very little maintenance through their life-cycle, and are extremely eco-friendly and cost-effective. Examples include - Hitachi RBWR (Resource Renewable Boiling Water Reactor); AREVA EPR; and Toshiba 4S (Super Safe, Small and Simple).
Consider the case of Galena in Central Alaska – this is an area around the river Yukon, with small, isolated population centers, limited infrastructure and harsh conditions. According to Galena’s council budget, the power produced had to be less than $0.20 / KWH O&M costs; and less than $1.5 million in annual fuel costs. In addition, the power generator had to be of zero-to-low emissions, with modular/factory construction and yet, reliable & safe. Galena short-listed Toshiba to commission a solution that would be truly pioneering. Toshiba, in collaboration with CRIEPI, developed 4S, which simply stands for Super Safe, Small, & Simple. 4S is a compact Sodium-cooled, metallic-fueled reactor that uses enriched uranium (<20%) alloyed with zirconium. 4S comes in two variants – a 10 MW that is being commissioned in Galena, and a 50 MW that is still under development. 4S is factory built and delivered by barge to Galena, and the reactor is housed underground. 4S requires no refueling during its entire economic life of 30 years, and hence operationally hassle-free. Capital costs for 4S works out to $2.5 million per MW, and the electric power from 4S is estimated to be available at 5-7 cents per KWH. 4S reactor generates zero air or water emissions, and the reactor is returned to Japan at the end of its useful lifetime of 30 years (thereby eliminating nuclear issues), and Toshiba bears all (or most) of the licensing costs. If successful, 4S could just be the solution for countries that desperately need an alternative safe and economic solution to meet their growing energy needs. However, Toshiba has not yet indicated the time associated with commercialization and mass-production of 4S.
Coming from a nation that is riddled with power outages due to an acute shortage, I believe nuclear could provide a viable alternative for our ever-growing appetite for energy. Having been outside the Nuclear non-Proliferation Treaty (NPT), India has been largely excluded from trade in nuclear plants or materials in the past. The country is at the cornerstone of a new era, having signed the historic nuclear deal with the US, and this should pave the way for India to be on the same footing as China in respect to responsibilities and trade opportunities in nuclear industry.
Currently, The Atomic Energy Act 1962 permits only Government-owned enterprises in India to be involved in nuclear power. I sincerely hope the Government revisits this law and amends it to accommodate private players who could play a vital role in plugging the nation’s energy gap. Interestingly, India is home to about 30% of global Thorium reserves, and this could potentially make the country a net exporter of nuclear fuel. Only time will tell if this is achievable, and thus counter the challenges surrounding our dependence on fossil fuels. Watch this space.

McKinsey on Talent Management

According to McKinsey Consultants, Matt Guthridge, Emily Lawson and Asmus Komm, most companies are unprepared for the challenge of finding, motivating, and retaining talent. The experts draw their conclusion after revisiting a McKinsey study conducted about a decade ago titled the War for Talent in 1997 - the study that drew attention to an imminent shortage of executives. The consultants conclude that even today, the problem remains acute, and if anything, has become worse.

The demographic landscape of global workforce is dominated by the looming retirement of baby boomers in the developed world and by a dearth of young people entering the workforce in Western Europe. Meanwhile, there are question marks over the appropriateness of the talent in many emerging markets. Lofty ideas and investments to address the talent problem have largely failed, compounding the frustration of many senior executives. In recent past, organizations have invested heavily to implement human-resources (HR) systems and processes, and talent issues have unquestionably moved up the boardroom agenda. Although these moves are laudable and necessary, they have been insufficient at best, superficial and wasteful at worst. Too many organizations still dismiss talent management as a short-term, tactical problem rather than an integral part of a long-term business strategy, requiring the attention of top-level management and substantial resources. To manage talent successfully, executives must recognize that their talent strategies cannot focus solely on the top performers; that different things make people of different genders, ages, and nationalities want to work for (and remain at) a company; and that HR requires additional capabilities and encouragement to develop effective solutions. Only in this way will talent management establish itself at the heart of business strategy.

The experts point at three external factors — demographic change, globalization, and the rise of the knowledge worker – as the reasons forcing organizations to take talent more seriously. But the threats don’t come solely from the outside; companies themselves have made matters worse.

While the developed world wrestles with falling birthrates and rising rates of retirement, emerging markets are producing a surplus of young talent; in fact, they graduate more than twice as many university-educated professionals as the developed world does. Many organizations have been eyeing this source of talent enthusiastically, but riding the new demographic tide won’t be straightforward. HR professionals at multinational companies in emerging markets such as China, Hungary, India, and Malaysia have told McKinsey researchers that candidates for engineering and general-management positions exhibit wide variations in suitability. Poor English skills, dubious educational qualifications, and cultural issues—such as a lack of experience on teams and a reluctance to take initiative or assume leadership roles—were among the problems most frequently cited.

A particular demographic challenge comes from Generation Y—people born after 1980—whose outlook has been shaped by, among other things, the Internet, information overload, and overzealous parents. HR professionals say that these workers demand more flexibility, meaningful jobs, professional freedom, higher rewards, and a better work–life balance than older employees do. Another challenge, as companies expand into new international markets, comes from globalization. To succeed in countries such as Brazil, China, India, and Russia, organizations must have executives willing and able to work abroad. They also require talented local people, with an international mind-set, who understand local ways of doing business and local consumers—notably, the needs of an expanding middle class. Finally, knowledge workers, the fastest-growing talent pool in most organizations, have their own demands and peculiarities. By one estimate, 48 million of the 137 million workers in the United States alone can be classified in this group; a single company can employ upward of 100,000. Knowledge workers are different because they create more profit than other employees do—up to three times more, according to McKinsey research—and because their work requires minimal oversight. Yet McKinsey research suggests that some of companies struggle to extract value from this newly enlarged type of workforce. Further, the technology supporting its work has created faster and better ways to share information, and that further drives the demand for such workers and their potential impact.

The expert state that emphasizing the recruitment and retention strategies for only the top-performing 20% or so is unlikely to yield significant long-term benefits. The impact of top talent on corporate performance hasn’t diminished, but as a result of the expansion of knowledge work — organizations can’t afford to neglect the contributions of other employees. A more inclusive approach is the need of the hour that involves thinking of the workforce as a collection of talent segments that actively create or apply knowledge.

The consultants feel that UK retailers are among the most enlightened employers in attracting young and old alike. Tesco explicitly divides its potential frontline recruits into those joining the workforce straight from school, students looking for part-time work, and graduates. Tesco’s competitor ASDA is the UK's biggest employer of over-50s—a population segment that ASDA equates with better customer service, improved team morale, and reduced labor turnover. In China, multinational companies such as Citigroup, GE, and HSBC, which must compete fiercely against local businesses for talent, tailor their employee value propositions to highlight opportunities for real decision making, career development, housing, and educational benefits and learning. The oil services group Schlumberger, introduced a path that proved to be a strong motivator in the technical community: performers at junior level were rewarded with promotions, status, and compensation comparable to what senior managers enjoy, as well as opportunities to shape research and product-development agendas. Senior technical peers rather than line managers review the performance of these specialists. Furthermore, Schlumberger has become one of the exploration and production industry’s leading recruiters of women engineers by introducing flexible work practices to accommodate mobility and other life cycle needs.
The experts conclude that only HR can translate a business strategy into a detailed talent strategy: for instance, how many people does the company need in order to execute its business strategy, where does it need them, and what skills should they have? For this to become a reality, HR directors should acquire deeper business knowledge. At Procter & Gamble, an aspiring HR manager is expected either to take a job in a plant or to work alongside a key-account executive to learn about a business unit and win the confidence of its managers. Coca-Cola Enterprises rotates top-performing line managers into HR positions for two or three years to build the business skills of its HR professionals and to make the function more credible to the business units.

Sunday, August 10, 2008

Clear & Present Danger for India (IT) Inc.

According to our friend Karl Keirstead at Kaufman Bros, in the IT services and consulting space, client demand is shifting beyond tactical IT projects to more strategic and complex cost-saving and transformational projects requiring greater innovation, deeper industry expertise, greater intimacy with the client's business and the need to sell beyond the CIO to other parts of the organization.

Most Indian vendors, however, have the seemingly dubious reputation for being project-based, less strategic and without deep industry expertise. This image has been further exacerbated by actions taken by the Indian vendors in the recent past. In an effort to cut costs and hold margins in the face of wage inflation and (until recently) the rupee appreciation, many Indian firms shifted the offshore/onsite mix to even more (higher-margin) offshore work, and shifted the employee base to even more (higher-margin) young college graduates. This has reached the point whereby the average number of years that software programmers at some of the large Indian outsourcing firms have been in the industry is now just two years or so. Many years ago, Accenture was mocked by its competitors as employing a delivery model of one senior partner and a "school bus" of inexperienced consultants fresh out of college. It now seems as if the Indian firms have deliberately shifted toward this model in an effort to hold margins steady and it may ultimately make any transition more difficult. Moreover, recent efforts to cut travel costs may help margins in the short term, but they end up further limiting client interaction at a time when the Indian vendors need to strengthen their client relationships and learn more about their client's businesses.

Looks like lack of proximity to on-the-ground client issues; coupled with lack of vertical expertise and weak client relationships are being responsible for Indian IT vendors’ increasing difficulty to engage the c-suite. This has resulted in Indian IT vendors being left out by the client while making strategic and transformational choices.
India (IT) Inc’s strategy of positioned herself as a ‘Thought Partner’ contributing to higher value solutions, rather than just an ‘Implementation Partner’ providing lower cost services, is definitely not working. It requires urgent and immediate actions on the part of Indian IT players to ensure sustenance.

Tuesday, August 5, 2008

Strategy & Some Basic Formulation Models

The word ‘Strategy’ derives from the Greek word stratēgos, which derives from two words: stratos (army) and ago (ancient Greek for leading). Stratēgos referred to a 'military commander' during the age of Athenian Democracy. A Strategy is a long term plan of action designed to achieve a particular goal, most often "winning." Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated, and often practically rehearsed. Strategies are used to make the problem easier to understand and solve.

In India, documented evidence on concept of Strategy dates back to 4th century BC through ‘The Arthashastra’ (Arthaśāstra), which is a treatise on statecraft, economic policy and military strategy; written by Chāṇakya, a professor at Taxila University and later the prime minister of the Maurya Empire.

According to Nick Obolensky, professor of Leadership and Strategy, the concept of strategy being applied to contemporary business first emerged after the Second World War through people such as Bob McNamara, then President of Ford and later Secretary of Defense under Kennedy. ‘Theory of Games and Economic Behavior’ by Von Newmann & Morgenetern formulated methods of resolving conflicts in politics, war and business. Moving beyond the traditional assumption that a market is a Zero-Sum Game, ex CEO of Intel, Andy Groves, coined a new word ‘Co-Opetition’ – a merger of cooperation and competition. Adam Brandenburger of Harvard Business School and Garry Nalebuff of Yale School of Management elaborated on the subject in their seminal work ‘Co-Opetition’ using the Value Net, which is a schematic map that helps visualize the game of markets.

Any successful business strategy, according to professor Obolensky, will need to ensure it has the following three building blocks: 1) fast & efficient processes and systems (IT strategy); 2) a structure & culture that supports the overall strategy (HR strategy); and 3) a shrewd financing strategy.

Any of the below three basic models can be employed to formulate a strategy: 1) matrix-based formulation model – with independent and dependent variables plotted on scale along ‘x’ and ‘y’ axes; 2) mnemonic letter-based formulation model such as SWOT; and 3) issues/theme-based models such as Porter’s Five Forces model.
An effective strategist must use her experience and instinct and apply the right type of model that is best suited in the unique situation of a company in question, and the context within which the company operates.

Google on Cloud & Enterprise Computing

Below is the summary of opening remarks by Dave Girouard - Google Inc. - President, Google Enterprise at a recently held Technology Leadership Forum. Clearly, Dave’s remarks suggest to me that while MSFT may have won the desktop battle, its Google to watch out for in the online battlefield. One thing is for sure - with the envelope of efficiency being pushed further and further, it’s the consumers who will be the ultimate gainers.

On Cloud Computing
It's definitely gotten to a hype level in the press, and it can mean a lot of things. Generally speaking, it means accessing technology through a browser and having nothing to install on the client, nothing to install in your data centers. It can be used probably to describe consumer markets as well, and in some way probably describe all of Google. But I think a lot of the context for cloud computing is around business computing and enterprise computing. I tend to break it into two related but different segments. One really is applications, sometimes referred to as Software-as-a-Service. And then platform, or infrastructure, or Platform-as-a-Service or Infrastructure-as-a-Service--call it what you will--where basically you allow the developers or companies or third parties to build applications on top of infrastructure. So I think--and there's many, many flavors of that. So it covers a lot of ground, and that's a lot, I think a lot of people are using it conveniently to describe almost anything they do these days, which is probably the sign of ultimate hype in a term.

On what’s most attractive to Google?
With our products, stuff that we refer to as Google Apps, which is essentially a set of applications that we build for, not just for consumers, where they started, but now for businesses of all sizes and flavors. We refer to that suite as Google Apps. That's our application play, and there's a lot we expect to do with that to expand on it, build on it, more functions, more features, occasionally more applications on the application side. And then the infrastructure side, we're actually doing very little today. We're getting started. We have what we call App Engine, which is in essence a way for developers to build applications on top of Google infrastructure. And it's only a very simple preview release. It's not really a commercially offered application or platform today. But generally speaking, we want to offer over time more and more ways for companies and developers to take advantage of the computer infrastructure that Google has. And eventually we would envision a day where software developers would have the same access to our infrastructure like Google engineers do. And that has a lot of great potential, and it's going to take a lot of work to get from here to there. So we have interest in both. We're a lot further along in applications than we are in infrastructure today.

How to enter into a Client’s thought process?

The best way to get around the attitude of the busy leader of a SME and deliver something that is highly valued; and one that makes profound difference to their business performance is – to begin one step back i.e. working first on whatever problem or issue is real and pressing today. According to management consultants, Rosemary Harris Loxley of Harris Consulting & Tony Page of Page Consulting, this means doing essential work rather than nice to have and fancy work. The experts opine that a consultant must use a lot of ‘Questioning’ and ‘Listening’ to enter the client’s way of thinking, and follow a process that produces learning, insight and lasting impact on the client. This way, the authors say, a consultant can lead on to ‘Implementing the Solutions’ and help clients see their world differently. This approach was famously proposed by Reg Ravens in ‘Action Learning’. The approach recognizes that consultants who ask their clients questions generally tend to trigger more active, and hence profound, learning in clients, than those consultants who merely solve the problem for their clients and serve pre-formed solutions.

The authors make reference to the tool that is derived from ‘Kolb Learning Cycle’, which uses a simple sequence of questions to identify and understand the client’s problem, and to help implement the solution. The questionnaire should ideally start with probing the current issue i.e. the problem that is occupying the client right now, and must slowly move into probing the shared pool of knowledge between the client and consultant. The questionnaire must make the client reflect, gain insight, and help explore alternative ways forward to ultimately help think towards implementing a solution. It is also useful to build a loop back process, to explore new alternatives after piloting or implementing a solution.

In the process, the consultant should bring the client’s deep experience and tacit unarticulated know-how to the surface. This must then be challenged, tested and amended, in conversation with the client. Lastly, the consultant must help the client internalize and embed the new know-how in revised operating practices.