I have been in love with the word ‘musings’ ever since I first came across. I was hesitant to use this for my writings because Professor Henry Mintzberg wrote an extremely insightful article in 1996 in the Harvard Business Review under the same title (https://hbr.org/1996/07/musings-on-management), with the sub-title ‘Ten ideas to rile everyone who cares about management’. Frankly, I was worried I might be seen as ‘copying’ although these are commonly used words. However, I found a 1982 short essay by Edgar G Williams in ‘Business Horizons’ Volume 25 (2) (https://ideas.repec.org/a/eee/bushor/v25y1982i2p2-5.html). And I also found Management Musings, Musings on Project Management and so on. I felt comfortable using the title.
I am using the word Management in a very broad sense, the way it was used by Peter Drucker in his The Practice of Management (1954) still eminently readable book, as it lends the freedom and flexibility to observe and reflect on what drives businesses, how they change, how they evolve, how they die.
I will keep adding to these ‘musings’.
Price discovery as the foundation of a business (and its disappearance)
Seems like a simple factor but proved to be decisive in building a business, letting it flourish but also paving the way for its eventual demise. In a business like auction, the key element is price discovery. The process of bidding throws up many prices finally settling on one. Ebay pioneered and organized this business on the internet and flourished for a while until, price discovery happened elsewhere, outside Ebay, thus robbing it of its unique aspect.
Most of us have seen and personally experienced fundamental changes in people’s behavior after the advent of the internet, especially in expecting certain things to be free when earlier they would have had to pay. One of the fundamental changes was in gathering information since there was no price attached. Equally, even sellers began publishing information about prices. Either that or price aggregators emerged. In fact, aggregation as a business grew a lot in the dotcom era and even later. This enabled people to compare and contrast prices (and features) of the products they wished to buy, before finalizing on one product. If you have followed the drift of what I am describing, price discovery became an independent activity and not tied to auctions. Once this became a firm trend, this cut from underneath the foundation of businesses such as Ebay, which began seeing an erosion of its auction business. I am mentioning Ebay because it was the most famous, lest anyone think I have an agenda. The pioneer always attracts scrutiny. Fortunately, Ebay had other activities too one of which was hived off as an independent business – PayPal.
I will write in another musing on this point – more than one business domiciled within one business entity.
Don’t reinvent the wheel
Almost everyone would have heard this expression usually offered as a sane advice not do something that is already available. There is a problem though, as it assumes that you know what the wheel is. Do you? What if the wheel was not what you imagined it to be, which means that there is no question of reinventing?
The trouble with such glib talk is that betrays lazy thinking. One of the commonest areas where this ‘advice’ is offered is in ‘Make or Buy’ decisions including software systems. Talk to anyone who has been involved in implementation of any ERP or any software system deployed through an organization. It is a nightmare. Considerable time is spent on ‘gap analysis’ to estimate the difference between what the system offers and what the organization needs. Once this is done, satisfactorily, there arise two linked questions – how much to customize (without seriously affecting maintenance) and how much adjustments to usher in the organization’s way of working (to suit the software system). Once this exercise is completed the actual implementation starts. All customizations have to be examined in depth and detail to ensure that it does not affect the integrity of the system. The entire project could run into 2-3 years with a few more for the system to stabilize. And you wonder then whether it would have been sensible to build their own system according to their specific needs. One of the world’s most famous banks built its own software because, as they would say, no one understood their business better. And their operations which is where systems fail.
Some years ago, there was an education-technology company which, using the logic of not reinventing the wheel, acquired a small company that was engaged in (what seemed) a similar space. Problems started once the acquisition was completed because the approach to the core business was different thus making further developments unnecessarily challenging. After 3 years, there was no significant progress at all, eventually leading to a complete change in the business plan!
