Management theory – just mumbo jumbo?

I am writing here after a really long time. During one of my train journeys between Chennai and Bangalore last weekend, I happened to re-read this article that I had saved for later reading on my mobile device – this appeared on The Economist six months back (read it here). The Economist argues that management as a discipline is similar to the Medieval Catholic church that was transformed by Martin Luther about 500 years ago (business schools = cathedrals; consultants = clergy; the clergy speaking in Latin to give their words an air of authority = management theorists speaking in mumbo-jumbo that only their peers can understand; and having lost touch with the real world).

The Economist avers that all management theory is about four basic ideas – consolidation across industries rather than competitiveness, fewer entrepreneurial success than celebrated in popular discourse; maturing organisational bureaucracies that slow down firms rather than speed; and the seemingly inevitable globalisation being reversed by trends (including ‘Make America Great Again’ and ‘Brexit’). A redemption is therefore called for. Let me re-examine the four trends in the context of Indian business context.

1. Consolidation rather than competition

There is surely a trend of consolidation in Indian industry. The telecom service business is a case in point – the entry of Reliance Jio has led to severe performance pressures and possible consolidation of the service providers (read here); SBI merging its associate banks and other possible PSB mergers (read here); or even the retail industry (read here). Is competition really going down? I think a variety of management theorists would say no. From high velocity environments and hyper-competitive environments in the mid 1990s through mid 2000s, the discourse has evolved to disruptive innovation in the late 2000s, to Industry 4.0, Internet of Things, Artificial Intelligence, and Big Data in the mid 2010s. The fads have changed, but the discourse has always been dominated by some fad or other. We management theorists have and will always seek to sustain our legitimacy by maintaining how difficult it is do business ‘today’ and in the near future. Has there been a time when a management scholar has said that “we live in stable times”?

2. Entrepreneurial failures

Yes, we live in interesting times. There are more and more firms founded, especially in clusters like Bengaluru (erstwhile Bangalore) and Gurugram (erstwhile Gurgaon). But as The Economist argues, there are more and more entrepreneurial failures that the media reports. And these failures come in myriad forms – simple shutdowns like the ones described in these articles (25 failed startups in 2016), or sellouts to larger competitors (see this list of acquisitions by Quikr).

3. Organisational bureaucracies

With so much churn in the ecosystem, we management theorists propound that business is getting faster. Yes, network effects allow for some businesses to scale faster than traditional pipeline businesses. However, given the ubiquity of such businesses  and easy imitation of business models, a lot of startup failures are attributed to these businesses not scaling sufficiently fast enough! Think Uber in China, Snap Deal in India, and other such startups. Scaling is easier said than done.

4. Rise of nationalistic tendencies

This is possibly true of most economies in the world today – rise of nationalism, and the ‘de-flattening’ of the world. Right wing protectionism is on a steady rise, and in some countries, it has reached jingoistic heights.

Time for redemption. What can management theorists do?

It is high time we redeem ourselves and the discipline. Given these trends, here is a callout for management theorists to make their discourse relevant to the business environment of today. We (as management theorists) need to get off the ivory towers and start communicating to the managers of today and tomorrow. While research output as measured by top-tier journal publications is important for an academic career, it is equally important for translating that research into insights relevant for the business managers. The Indian management researcher has very little options to publish high quality research in Indian journals. The quality of Indian management journals targeted at academics leaves much to be desired. Neither are there a variety of high quality Indian practitioner-oriented journals. And the circulation numbers of these journals amongst Indian CEOs? And where are the cases on Indian companies? The number and quality of cases published by Indian academics on Indian firms are too low to be even written about.

dilbertKnowledge

(c) 2017. R Srinivasan.

 

My platform business models journey

Writing this blog after a long gap. New administrative responsibilities at my school required me to invest some mindspace towards understanding the role, my team (and their roles), and setting up priorities and processes.

I am also figuring out how to respond to blatant plagiarism – some pages from this blog have been plagiarised (word by word, including my writing in first person!) and reproduced at another blog. For example, check this out: http://digiplus.runwise.co/network-mobilization-platform-businesses/ and how this page is different from the original post: https://srini108.wordpress.com/2016/05/26/network-mobilization-in-platform-businesses/. Another page that has been plagiarised is here: http://digiplus.runwise.co/building-platform-business-hard-work/, which is an exact copy of my post at https://srini108.wordpress.com/2016/05/03/building-a-platform-business-is-hard-work-not-for-lazy-people-a-response-to-prof-ajay-shahs-column-in-the-business-standard/. I have written to the supposed author requesting for removal of the infringing posts, but have heard no response. Plus, I have left comments at the bottom of the infringing blog pages that those pages were indeed plagiarised, but those comments are “awaiting moderation”. I have now learnt a lesson. All these pages now come with an explicit copyright assignment, and I am going to make it difficult to plagiarise with increasing use of personal pronouns.

Today morning, I was asked by our Dean to present the evolution of my research, teaching and consulting interest in platform businesses. It was an interesting exercise of thinking through the evolution over the past three years. In this blog post, I intend to capture a  short glimpse of the same.

A network of accidents

It all began with a network of accidents. Three accidents to be precise. A dorm-mate from over 20 years back invited me to his company (he had just relocated to Bangalore) for a short discussion on product design ideas. When I went there, I discovered that apart from him, there were enough members of his team who were my students at both IIMB and IIML. Which made the discussion interesting and lively. The “product” that they were developing was actually a platform for the FAs to serve their business process outsourcing customers. And we had a fruitful discussion on the economics of platforms, why network effects are important to understand, and how can the company monetise the efforts, if they chose to (subsequently, they chose not to monetise the platform directly).

The second accident was when a colleague of mine at IIMB could not attend an event his friend was planning. This friend was an entrepreneur setting up a business around pharmaceutical retail supply chain, and had invited his “Professor friend” to talk to his customers (pharmaceutical distributors). My colleague could not attend the event, and requested me to stand in for him. I travelled to Chennai, had an eventful breakfast with the founding team; and over a couple of aloo parathas (potato filled Indian bread), changed their business model from a SaaS model to a platform business model. The said breakfast meeting, I am told, is currently a legend in the company history/ water cooler talks.

The third accident took place (though not in the same chronological sequence as being reported) when another colleague of mine from the Quantitative Methods was leading an team writing a case on a firm. The case writing team felt that there were more strategic issues in the case, and invited me to join in one of the meetings. During the meeting, it was apparent that the firm was transitioning from being a product firm (selling boxed software) to a platform-based business, where product was just a hook for a variety of other services and value propositions.

Consulting and advice leading to case writing and research

These three accidents led me to document them as cases, and I began providing advise/ consulting to some of them. I got introduced to more firms operating platform businesses, and discovered that some of these entrepreneurs were actually making decisions about platform businesses, quite intuitively, without actually knowing the theoretical work behind the same. And boy, weren’t they successful! They have survived the dot-com bust, a series of recessions, and the growth of digital businesses. More learning talking to these entrepreneurs (academics call this as grounded theory). More cases followed, and I began to understand the economics behind the same. I initiated a series of projects around the same, got funding from IIMB and FAU for the same, and wrote a series of cases.

Evolution of the course(s)

As the number of cases bludgeoned, I was invited by the FAU (http://wi1.uni-erlangen.de/) to teach a course on digital business, and I latched on to the opportunity to launch a course on platform strategies. That one course led to another, and I offered an improved version of the same at IIMB immediately thereafter, and then as the number of cases grew, and I began filling in learning gaps, offered a larger version of the same at IIM Trichy. And now both the FAU course (http://wi1.uni-erlangen.de/teaching/strategies-platform-mediated-organizations) and the IIMB course (http://www.iimb.ernet.in/node/5610) have now become 5 ECTS and 3 credit (full thirty hours) courses.

This blog

As the courses matured, I began writing a lot of notes for myself. In fact, true to a business school professor, I would typically prepare for the class, get a lot of insights to share with the class, share a few in class, and the rest of them would remain in my notes. Some of my students continued to urge me (no, I am not substituting it with encourage) to write a blog. And I began this blog in April 2016 (once my course was over). My teaching assistant, who travelled with me to IIM Trichy and took copious notes of my classes was extremely helpful in ensuring that the information loss from the class discussion to the written notes was minimised.

Blog leads to more connections and research

Based on this blog, some of you came back to me seeking specific advice on setting up and running platform businesses; I engaged with a few firms, and more cases followed. The blog now has led me to more connections, and spurn on more research questions. In the meantime, a lot of my PGP and EPGP students have undertaken projects on specific questions around the platform business models (I will run a series on those projects in the next few weeks), and more insights and research questions emerged.

24-1-journey

The journey has been exciting, I have learnt a lot. And hopefully, things will continue.

(C) 2016. R. Srinivasan, IIM Bangalore.