Softscaling

I always had a feeling that though western management models have been prominent in our business education, there is something about our Indian management, which is worth study by global managers. So I was happy to see a research briefing from MIT CISR, which is based on research done at five top-performing Indian companies viz., Airtel, Hero MotoCorp, HDFC, Tata Motors and Max Healthcare. The researchers have termed the strategy of these firms as softscaling, which involves combining the rational use of data to optimize business process efficiency with the empathic use of data to understand and connect with customers and other stakeholders. I would strongly recommend reading this 3-page research briefing, which is available online at http://cisr.mit.edu/blog/documents/2012/03/15/2012_0301_softscaling_agarwalweill-pdf/.

Customer-facing digitization creates the most value

In a recently published research briefing from MIT CISR, the authors have recommended that digitization of customer facing processes should be given higher priority than that of shared services and operations processes. Their recommendation is based on the study in which they assessed degree of digitization by examining 12 core enterprise processes in three key areas as follows:

1. Shared Services: budgeting and financial management; closing the book; recruiting and hiring; employee performance; corporate performance
2. Operations: supplier performance; fulfillment; logistics and supply chain
3. Customer facing: identifying sales prospects; managing customer relationships; market testing; identifying customer needs

With a sample of two thousand firm, the key finding is that having more digitized customer-facing processes seems to help performance, particularly growth: firms with digitization of customer-facing processes in the top 25% had a median revenue growth of 9%, compared to 4% median revenue growth for the entire sample.

I agree with this recommendation but for a reason other than mentioned in the research briefing. I think digitization of shared services and operational processes can help improve profitability but to increase revenue, you need to enhance digitization of customer facing processes. My two cents worth!

Book Review: Super Freakonomics

If you have read Freakonomics then you will quickly pick up its sequel – Super Freakonomics. Like its predecessor, this book explains how microeconomics concepts get applied in real life. In this book, the authors have vividly shared findings of their own research and that of others to show how economic principles work in domains such as prostitution, terrorism, healthcare, global warming, etc. Simply superb!