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Monday, January 16, 2012

Ideas are cheap, its the small picture(execution) that mattters

Operations, Cost cutting/rationalization and management accounting are not the most romantic of subjects. Very few case competitions around then, low key buzz and few students interested in that as a career path in IIM-A/B/C. That is why though we go through the motions of learning those subjects in MBA, few really appreciate their importance or seriously consider it as a career path. The reasons for this are ultimately recruiter driven, and are the lack of awareness
  1. For every high spending foreign bank, there is only one HDFC which dares to trim costs to the bone and operate with discipline(more recently ICICI 4Cs strategy has Cost as a vital part) 
  2. For every Kingfisher/Jet, there is only one Indigo which manages to operate profitably and slash costs at the right places w/o affecting safety
In pre recession times, it is the marketing jargon that gets the headlines/management span, but at the whiff of trouble, jargon shifts to cost jaws, headcount rationalization etc. Be it SKS,Kingfisher Airlines, ICICI or others, all have realized the importance of unromantic cost cuts, and focusing on the minor details. Large picture strategic thinking only takes you so far.

During a business plan competition which my team won, a key feedback from the judges was that we won because of how we addressed the ground level issues and key operational areas. While this is not relevant in all situations obviously, it does highlight the way VCs think(2 were VCs/PEs), and reflects the way smart money thinks. So in the midst of those hi-fi MBA case studies, don't ever forget the 'trivial' execution details about organization structure, budget, costs etc. Despite the seductive appeal of strategy, the best strategy poorly executed will not achieve its results.

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