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  • Business Model – creating a fabric to link the stakeholders

    In the startup context, where survival is primary, entrepreneur’s pursuit is one of finding a business model that would stand their firm in good stead ensuring growth and profitability. One doesn’t have to reiterate the importance of finding the right business model or the long term viability of the company. The term “Business model”, often used in the business community, refers simply to the way the company makes money through a set of activities. I had blogged about some prevalent business models a long time back elsewhere and here is a link to the same:
    http://somanagement.blogspot.in/2011/05/business-model-journey-this-far.html
     
    Given the large number of business models, one could easily believe that finding the right one to suit their business would be easy – however this is not to be.
     
    Creating the business model is akin to building a tower from cards. The cards are all balanced and mutually supported. The flexibility at this stage is the ability to move the cards around and ensure the balance is in place. Only if the balance is created can the attempt grow beyond a specific size. Once the card tower is built, it’s time to build stronger bonds – think of glues that would make it more permanent.
     
    [Note: this glue itself could be a limiting the growth/flexibility, but that’s the game one has to play – You cannot just build a larger tower if you focus on too much flexibility!]

    From my experience of interacting with startups, I clearly notice that – attempting to build a business model relies a lot on finding the right balance between the various stakeholder commitments and then synch their acts to make the complete business engine operate without glitches. It is only over multiple iterations of engagement and testing the various business hypotheses that such a structure could be created and controlled through routines/procedures/policy for the business execution. These sum up the entrepreneurial learning and help guide the business moving ahead. Thus, we could visualize the firm’s business model as a fabric binding the various stakeholders in a specify tension through the binding and dependency of the various activities.
     
    A natural question that arises here: is the claimed complexity of Business Model creation in a start up really hard? Why not just imitate?
     
    Stated differently the question is – there are existing models that have been used, wouldn’t it be just easy to start off by imitating a business model? Here is my argument why this many not be easy:

    Yes, imitation could give you a head way into starting (a map say), but eventually you have to design and use a business model that suits your business needs – your customers define that. The geographical limitations, the economical situation, the capability of the talent available, cultural context, all have an influence on the business model that finally emerges. Even large companies that operate businesses across the globe cannot expect the same audience and therefore need to modify their model!

    Increase the above stated complexity a hundred or thousand times – that is the environment that a start up is dealing with – the haze surrounding the start up is so high that it probably cannot even see a few meters ahead with clarity! The changes of survival for a start up enhance by actively seeking the right partners and steadily creating a business from the idea. The Business model is developed through multiple iterations of this nature.
     
    What role does the entrepreneur’s ingenuity play in the process of building a good Business Model?

    While some of the factors explained above are definitely important – my observation is that the initial mindset of the entrepreneur and the founding team would defines largely the business scale. While business are built to cater to customer demands, and one could often confuse the existing customer segment size to define the scope, I perceive it as a function also a stakeholder relationship (resources) and the innovativeness with which the relationships amongst the various stakeholders(my opinion on this listed in an earlier blog) are created to derive a greater benefit. 

    Recollect: my claim of saying there is definitely an important role the entrepreneur plays and not everything is defined by the customer! The discussion could be extended to other stakeholders like – employees, suppliers, investors etc. (pick up links to older blogs)

    In the context of an established organization, the board  has to be constantly on its toes validating to see if they are living up to the market trends or are they defining the market trends else their lethargy could risk a death changing ecosystem. The business model thus has to constantly evolve.
     
    It is hard to consider a lot of dimensions of business and it would definitely benefit if there is some guidance on the same. How do we ensure that the business model effectively covers all aspects of the business? 

    I feel a very useful tool that most businesses could use is the Business Model Canvas (check this link– http://www.businessmodelgeneration.com/  for a detailed coverage). Here is more pictorial lively representation of the canvas is as blow 🙂
    The various blocks of the canvas help keep in mind the various components of the business in a balanced manner. If the business keeps a constant vigil on these dimensions it would help them identify when business shifts would be needed. The 9 blocks of the canvas:
    1. Customers
    2. Value Proposition
    3. Customer Relationships
    4. Channels
    5. Key Partners
    6. Key Activities
    7. Key Resources
    8. Costs
    9. Revenue
    One clear benefit of the canvas is to emphasize the importance of the various blocks and gets the attention of these towards these and focus on these (lest you miss them). 

    The Business Model Canvas though extremely useful, has some limitations in the startup context. I guess this would be the subject of another blog keep watching the space for more.

  • Forms of Organizational Conflicts

    In the last byte, we looked at how globalization has begun affecting conflicts in organizations. In today’s byte, we look at the various forms of conflict in an organization.
     
    We could group conflicts into the following forms:
    • Interorganizational Conflicts – this refers to conflicts that occur between two or more organizations
    • Intergroup Conflicts – this refers to conflicts that occur between groups or teams in an organization
    • Intragroup Conflict – this refers to conflicts that occur within groups or teams
    • Interpersonal Conflict – this refers to conflict that occurs between two or more individuals
    • Intrapersonal Conflict – this refers to the conflict that occurs within an individual
    • Interrole Conflict – this refers to the conflict a person experiences amongst the multiple roles in his or her life
    • Intrarole Conflict – this refers to the conflict that occurs within a single role, such as when a person receives conflicting messages from role senders about how to perform a certain role
    • Person-role Conflict – this refers to conflicts when an individual is expected to perform behaviors in a certain role that conflict with his or her personal values

  • Conflict in the context of global organizations

    In the last byte, we looked at some of the structure issues that could give raise to conflicts. In today’s byte, we look at how conflict is influenced by the increasing globalization.

    Many Multi-National companies employ people from different ethnic and cultural groups. This gives rise to vast differences amongst individuals and increases the potential for conflict.
     
    Individualism means that people believe that their individual interests take priority over society’s interest. Collectivism on the other hand that people put the good of group first. Given the cultural contexts, individualism/collectivism could lead to have a lot of influence conflict in managerial context.
     
    Power Distance across cultures is another source of conflict in the era of globalization. The source of conflicts in case of power distance would result from the way one respect people in higher levels of power.
     
    How people perceive the uncertainty and how they attempt to avoid uncertainty is another source of conflict in the scenario of globalization. Some cultures handle uncertainty better than others.
     
    Time orientation is another dimension that could lead to conflicts when working with people across different cultures. Chinese are generally having a long term orientation, while the US and Russian countries have a short term orientation.
    We next look at the various forms of organizational conflicts.

  • Structural causes of Conflict

    In the last byte, we looked at the structural causes of conflict. In today’s byte, we look at the personal factors as a source of conflict.
    • SKILLS AND ABILITIES – Diversity in skills and abilities could be positive sometimes, but could also turn out to be potentially a source of conflict when jobs are interdependent.
    • PERSONALITIES – Individual personality differences play a crucial role when in organizations. A specific style of an individual could be useful from the organizational perspective, but may be hated by co-workers
    • PERCEPTIONS – Individual differences in perceptions are another source of conflict. Not all of team members perceive the same aspect of what they are trying to achieve too!
    • VALUES & ETHICS – Individual sets of values and ethics and the translation of these into a workplace concept could be a potential source of conflict in organizations.
    • EMOTIONS – Individuals carry in emotions from a different context (may be home) into work place and this could be hard for people to deal with and b a source of conflict.
    • COMMUNICATION BARRIERS – Language, Distance, etc could distort the message and potentially lead to conflict.
    • CULTURAL DIFFERENCES – Lack of understanding of another culture and their values could be another source of conflict.

  • Structural sources of organizational conflict

    In the last byte, we began our discussion about the sources of conflict. We listed the structural sources of organizational conflict in the last byte; we shall discuss these in a bit more detail here.
    • SPECIALIZATION – When jobs are highly specialized, employees become experts at certain tasks.  Highly specialized jobs could lead to conflict as people would be little aware of the tasks that other’s perform.
    • INTERDEPENDENCE – Sometimes work requires groups or individuals to depend on one another to accomplish a certain goal.  This dependency is not an issue as long as the process works smoothly, however it could soon turn into a blame game when there is a problem.
    • COMMON RESOURCES – Sharing common resources by multiple people could be another source of conflicts. This escalates in case the resource is scare.
    • GOAL DIFFERENCES – When multiple groups work towards maximizing a specific group objective, the lack of understanding of other’s objective is the common source of this.
    • AUTHORITY RELATIONSHIPS – A supervisor-subordinate relationship is another source of conflicts as one has authority over another. Through greater emphasis on team approach, empowerment etc the potential for such conflict reduces.
    • STATUS INCONSISTENCIES – Resentment amongst people due to strong status differences (between management and non management say) is a source of conflicts.
    • JURISDICTIONAL AMBIGUITIES – Unclear lines of responsibilities within an organization is the source of such conflicts.

  • Conflict – Structural & Personal Causes

    In the last byte, we discussed about the how managers could identify between functional and dysfunctional conflicts. In today’s byte, we begin our discussion on the cause of conflict.

    The sources of conflict could be classified into 2 categories:
    1. Structural – these stem from the nature of the organization and the way work is organized
    2. Personal – these arise from the differences amongst individuals

    Following diagram is a quick summary of some of the causes of organizational conflicts –
     

  • Identifying functional and dysfunctional conflict

    In the last byte, we looked at the issue of dysfunctional conflicts, and built a case for the need to be able to identify between functional and dysfunctional conflict.

    Distinguishing between conflicts and being able to diagnose it as good or bad isn’t an easy task. The context of the conflict and the parties involved are key considerations for a manager in being able to diagnose the situation.
     
    Some of the key questions that could help the manager diagnose the type of conflict could be:
    1. Are the parties approaching the conflict from a hostile standpoint?
    2. Is the outcome likely to be a negative one for the organization?
    3. Do the potential losses of the parties exceed any potential gains?
    4. Is energy being diverted from goal accomplishment?
    If the answers to a majority of the questions listed above is “yes” then the conflict is probably dysfunctional.
     
    Once the type of the conflict is diagnosed, the manager could either work to resolve it (in case of dysfunctional conflicts) or stimulate it (in the case functional ones).
     
    We next explore the causes of conflict in organizations.

  • Dysfunctional dimension of Conflicts

    In the last byte, we looked at the functional dimension of conflicts. In today’s byte, we look at the dysfunctional dimension of conflicts.

    Dysfunctional conflict as we mentioned is an unhealthy, destructive disagreement between two or more people. The issue with such a conflict is that it takes way the focus away from the work to be done and places the focus on the conflict itself and the parties involved.

    Such excessive conflict drains energy that could be used more productively. The key aspect is identifying a dysfunctional conflict is that its origin is often emotional or behavioral. Disagreement that involves personalized anger and resentment directed at specific individuals rather than specific ideas are dysfunctional!

    People with a dysfunctional behavior could generally be found to act before they think and they often rely on threats, deception, and verbal abuse to communicate.
     
    In dysfunctional conflict, the losses to both the parties may exceed any potential benefit from the conflict. This emphasizes the interest in being able to diagnose such conflict early; we shall deal about this in the next byte.

  • Dysfunctional and Functional Conflict

    In the last byte, we looked at the positive and negative consequences of conflict. In today’s byte, we discuss about functional and dysfunctional conflict.

    We claimed looking at the consequences that functional conflict should be encouraged and dysfunctional conflict has to be discouraged. The challenge really is distinguishing between dysfunctional and functional conflict.

    • Functional Conflict – is a healthy, constructive disagreement between two or more people
    • Dysfunctional Conflict – is an unhealthy, destructive disagreement between two or more people.
    Functional conflicts can produce new ideas, learning and growth among individuals. By developing a constructive conflict, individuals develop a better awareness of themselves and others.
     
    The awareness doesn’t just limit itself to individuals, it could help teams develop an improved working relationship – by working through disagreement two parties feel they have accomplished something together.
     
    Functional conflicts can lead to innovation and positive change for the organization too – i.e. functional conflicts tend to encourage creativity among individuals, this positive form of conflict can translate into increased productivity.

  • Conflict – Consequences

    In the last byte, we began our discussion on conflicts. We also mentioned that not all conflicts are bad! Following is a summary of the consequences of conflict:

    Given the consequences of conflict detailed about, the key to conflict management is really to stimulate functional behavior and resolve dysfunctional behavior. We shall discuss these in greater detail in the next byte.