UNIRAZAK 12th convocation at PICC

Prof Omar at 12th convocation

Dedicated to batch number 12 Master students of UNIRAZAK. Their hard-work payoff. Today 2 November 2012, MOM students having their life great moment at PICC Putrajaya.

Rehearsal in progress for tomorrow's 12th Convocation Ceremony at PICC, Putrajaya

The day before, our beloved MOM students get ready for their next day convocation ceremony. Everyone looks great.

NIce convocation ceremony held at PICC Putrajaya. 

Parents and friends of graduates attended together in this big hall. Long hours to get the scroll. This is normal.
^^

hadiah buat Emak dan Ayah..

berjaya mendapat Master of Management dari Unirazak. terima kasih juga buat Keluarga, Sahabat-sahabat, dan semua yang memberi sokongan dan semangat buat saya . Alahamdullilah...( special buat Mak Itam dan pak Itam )

 This is a gift to parents of the scroll percipient. Mom gives a hug and big kisses to his beloved and success son.

Well done bro !

Master of management graduate celebrate their success with Prof. Omar. They passed through many hardship to get here.

May their success bring prosperity to our country

School of MOM graduates ^ ^

MS vs MBA

MS vs MBA

Many prospective graduate students question which fits them better – a specialized master’s or an MBA?

An MBA is a general degree that does allow for some specialization, while the Master science program is geared for those who know they want to specialize in management.

Only you can make the decision of which degree is right for you. But, here are a few key things to keep in mind about our Master degree program.

Breadth of coursework

Recruiters continually comment that  MS program is the best of both worlds. Universities offer a common body of knowledge similar to an MBA program but with a specialized concentration in HRM courses.

Personal attention

University management admit a selective group of students (i.e., 20-30) each year. That means class sizes are small, enabling students to get to know faculty members and other students in the program.

Because of master's program’s size, you will also have the opportunity to work closely with the program team and have access to the various job search resources. Ultimately, we will help make your transition from graduate student to intern to professional a smooth one.

The power of network

Faculty. Former students. Corporate partners and recruiters.

As a student in the Master’s program, you will be part of a powerful network of current and former students, faculty and business leaders.

Master's program gives you a theory-based classroom education, taught by nationally recognized faculty in the Department of Management. But, it also gives you invaluable hands-on application of your knowledge through research opportunities and practical work experience.

Whetting the Appetite of MBAs

Running a business where client demand for your product exceeds supply by a ratio of 250 to 1 may seem like an enviable business model to many MBA students. At its peak, Ferran Adria’s elBulli restaurant in Spain was fielding close to two million requests a year for one of the eight thousand dining places available, and the more than thirty course menu included dishes such as liquid raviolis, caviar made from olive oil, and 'Parmesan snow' that often seemed more about scientific research than traditional cuisine. 

However, despite its incredible popularity the restaurant struggled to turn culinary flair into bottom line profit, which might go some way to explaining why Adria has decided to shut up shop and focus on creating a ‘foundation for creativity and innovation' instead. Any business lessons learned in the name of art appear firmly embedded in the new project, because he has now turned to MBA students from five of the world's leading business schools to help him develop a sustainable strategy for the new elBulli foundation.

Speaking to students at UC Berkeley's Haas School of Business last week, Adria launched an MBA case competition, which will also include participants from Harvard, Columbia, Esade and London Business School and which will be supported by telecoms giant Telefónica. Never one to think small, Adria’s aim is to go beyond simple cooking and address the whole way that society interacts with creative talent. Tasked with keeping this particular creative balloon firmly tethered to solid ground, the competing student teams, each mentored by a business school professor, will therefore need to propose solutions for an organisational structure that can attract and retain the best international talent, find new standards for measuring performance, and ensure that the foundation will be economically and environmentally sustainable. As the super-chef puts it, “"It can't be a project in which I am the only one making the decisions. So the students have to come up with better ideas than me. And what better place than business schools to discuss how things can be financed and structured?"

Of course this is not the first time that business schools have whet the appetites of their students with lessons from the kitchen. French business school EM Lyon, arguably in the geographic heart of France's culinary tradition, already partners with 3-star Michelin chef Paul Bocuse and his Culinary Arts Institute to study the creative process, and think about how an apparently frivolous idea can be made to generate hard cash and lots of it. For Professor Rickie Moore, the exposure to unfamiliar environments such as top-flight restaurants – and specifically their kitchens - forces students to develop new ways of thinking that can be applied to more conventional organisations. 

Though students working with Adria and Bocuse may pick up some helpful tips on making the perfect scrambled eggs, the kitchen is not an excuse for a cooking class, but a tool for analysing efficiency and having the time and space to create new things. Let's just hope they steer clear of cooking the books.

Advice to direct marketers: let the people do the talking

Advice to direct marketers: let the people do the talking

---- by Rob Goldsmith ---- The explosion of social networking sites has been a boon for direct marketers. For the hundreds of millions of users of Facebook, MySpace, YouTube and so on, they are fun ways to communicate with their friends and make more friends. But for marketers they are huge databases of consumer information. This information is used increasingly by direct marketers as an efficient and cost-effective way to send targeted promotional messages to customers. But is it the best way? Peter Zubcsek Not so, according to new research by Peter Zubcsek, a PhD candidate in management at INSEAD, and Miklos Sarvary, Professor of Marketing. In fact, they say, using social networking sites this way can lead to significant profit losses for direct marketing firms. “Current direct marketing techniques are designed to treat individual customers as independent consumption units and generally ignore the structure of customer communication networks,” says PhD candidate Zubcsek. “This is a mistake.” By targeting the individual members of a network, many direct marketers are missing out on the real potential of social networks -- word-of-mouth communication. A powerful driver of consumer behaviour, word-of mouth has been recognised as the most effective means of advertising. Ignoring it can be costly, the authors say. In their paper, “Direct Marketing on a Social Network,” Zubcsek and Sarvary examine the influence of social networking on direct marketing strategies. "In my research, I'm trying to summarise a few new techniques that are becoming relevant our understanding of how to do marketing in this new environment where we have social networking sites (and) video sharing sites, where our cell phones are smarter and smarter,” Zubcsek says . “The question is whether this instant knowledge of the network of people, of how they communicate, whether the technologies and new interfaces of how we talk, should make marketers change their strategies." Due to the new technologies a lot has changed, not just for consumers but also for marketing firms and their capability to get the message out. Services such as mobile phone providers can map the entire structure of network connections. And there are ways of discerning who is a sophisticated user of technology and who can use the multiple services provided by a website or mobile operator. "This kind of differentiation didn't mean anything to marketing firms 15 years ago because there was no technology to use,” says Zubcsek. Now it does. For marketers the interesting thing about this is that the network structure maps the communication channels. As a result, they can actually identify the channels for word-of-mouth communication and potentially have a good idea about who is talking to whom and what they are talking about. But the amount of information that marketing firms can get depends on factors as the type of service and legal regulations in place. But there are ways to get social network users communicating about your brand or product. “Marketers rarely look into what gets communicated except for when they use memes,” says Zubcsek, who also has an advanced degree in technical informatics from the Budapest University of Technology and Economics. Memes are chunks of user-generated content such as a picture, message or a viral video. They are an effective way to generate word-of-mouth across a network. "For example, a viral video is intentionally created not only to see how it propagates across the network but actually to propagate information in the network,” he explains. “So very often humorous videos contain references to brands that they want to get attention for, and as the viral video travels, information also travels on network." The effectiveness of this method depends on how viral the message is. Humorous videos have a high degree of virality and so will be shared by many more people than one that only contains the brand reference. As a result, a funny video has the potential to spread a marketing message great distances across a network. Except for the cost of creating the video and launching it, direct marketers invest far less by using word-of-mouth techniques such as this, compared to sending customised, private messages to every subscriber in a network. “They will save money by not sending those messages, and they will actually gain on the revenue front because they will probably get a better response by the word-of-mouth messages than the direct marketing messages,” says Zubcsek. “Ignoring word-of-mouth can lead to significant profit losses for direct marketers. What they should do instead is let the people do the talking.” First published: April 15, 2010 Last updated: August 13, 2010 RG/KC 04/10

Visual equity: being front and centre increases sales

Visual equity: being front and centre increases sales

---- by Shellie Karabell ----    “Unless you’re Coca-Cola,” says INSEAD Associate Marketing Professor Pierre Chandon, “it’s important to be visible on the shelves.” This simple axiom tends to get lost in a barrage of marketing theories and quandaries over where to spend increasingly constrained marketing budgets: online, in print, broadcast or social media ... ? The answer today is “all of the above.” But, cautions Chandon, marketing managers beware: unseen is unsold. The impact of being visible in the store, where the majority of purchases are still made -- so-called ‘visual equity’ -- is more important than brand awareness (or ‘memory equity’) for two reasons. “First, it’s a precursor of choice,” Chandon says. “If people don’t see you, there’s no way their brand preference can have an impact. Second, consider that a hypermarket has up to 100,000 items for sale - even more if you go online, where literally millions of products are available. Our study shows that about two-thirds of products are never seen, never looked at by potential customers. Consumers have no way of finding all the products that are available, so you have to be visible.” Chandon’s research, conducted in the context of the INSEAD-Wharton alliance with Wharton professors Wes Hutchinson and Eric Bradlow, with Scott Young from Perception Research Inc., examines the effect of in-store marketing on both attention and choice and shows that the best way to sell your product at that vital point-of-purchase interface is to be sure your product is in the consumer’s face -- literally. But it’s an approach that works. “If you’re located at the top of the shelf, it increases the percentage of people who see you by about 20 per cent, but it also increases (the likelihood of) your brand being chosen by the same amount. And we also found that if you’re in the middle of a shelf placement and if you can increase the number of facings, the chances you’ll be seen and bought are increased.” The data supporting these statements are dramatic. “If you double the amount of ‘facing’ on the shelf, you will increase your ‘noting’ -- whether or not customers actually see you - by about 28 per cent, and you will increase your chances of being chosen by about 10 per cent,” Chandon says. The impact of shelf visibility on low-market-share brands is even more dramatic. “You’ll find you can increase your chances of being chosen by 67 per cent,” he says. Chandon’s statistics are based on real evaluation of human shoppers making purchase decisions while the location of their eyes is being tracked. “What’s fascinating is that we found that placement doesn’t just have a direct effect on attention,” says Chandon. “Yes, if your product is bright and visible, people will see it, but people also make inferences about a brand relative to where it’s placed on the shelf.” In other words, shelf placement can have an impact on the way customers perceive a brand. “People expect things on the top to be of higher quality. In fact, they expect things on top to be better in general -- you know, Heaven is up there, hell is at the bottom. So another question for marketing managers to consider is, ‘what inferences will people make about my brand as a result of my visibility?’ You can begin to change the image of a brand just by its placement on the shelf. ” Chandon also found that shelf placement can attract new customers to a brand. “If you’re targeting young people or educated people with an open mind who don’t buy just based on brand or based on price, you will increase the effect of this ‘visual equity.’” The same principles of visibility hold true for online sales, where ensuring search engines are primed with key words for your brand will increase visibility. But post-shopping follow-up questions revealed some shocking disparities. “We found that people have no intuition about what they look at,” says Chandon. “If you ask people: ‘What do you remember seeing?’ they will tell you what they typically like, what they normally do, what they think they do, which has no relation with what they actually look at.” In other words, shoppers might thinkthey’ve looked at one particular brand but have actually spent their time gazing at another. You pay for prime placement of course - on the shelves of a store or online. But Chandon says his research shows it’s money well spent, and suggests marketing managers re-allocate their budgets to pay more attention to point of purchase and think more about brand presence instead of just brand preference. “Spending some of your marketing money at the point where people actually make the decision in the store will help increase your brand awareness and visibility and perhaps even your brand image. The point of purchase is not just a distribution tool; it’s a communication tool,” says Chandon. “What we found is you’re going to get a better return on your marketing investment if you try to make your brand more visible.” Click here to access Chandon et al’s working paper: ‘Does In-Store Marketing Work? Effects of the Number and Position of Shelf Facings on Brand Attention and Evaluation at the Point of Purchase’. First published: December 16, 2009 Last updated: December 21, 2009 SK/KC 12/09

Growing a business with word-of-mouth marketing: the case of iXiGO.com

Growing a business with word-of-mouth marketing: the case of iXiGO.com

---- by Emma Beer --- Most start-up companies allocate a hefty budget for advertising and marketing at the beginning, especially when they have lofty goals of capturing market share. But an Indian online travel start-up has proven the unthinkable: you can do it all by word-of-mouth and not spend a penny on advertising. When Aloke Bajpai (MBA ’05J), decided to start a company four years ago he aspired to build the “Google of all travel”. Bringing two former colleagues on board, Aloke and the small team worked day and night to developiXiGO, from a small apartment in Gurgaon, India. They launched in June, 2007. With a marketing budget of zero, iXiGO set out to reach the rising Indian middle classes and global travellers alike, through “word-of-mouth” marketing. According to INSEAD Assistant Professor of Marketing Andrew Stephen, “It was their belief, that if the product was good enough, it would succeed and people would tell others about it and it would start to take off.” While “word-of-mouth” marketing can take many forms, iXiGO is an example of what Stephen calls organic word-of-mouth. “It’s not the case where they perhaps seeded it with certain consumers and what I would call a buzz or viral marketing campaign where they really tried to solicit word-of-mouth. Here, they put the product out there, they introduced it to the market and they just let people naturally talk about it…they would rather spend their money on developing the product and developing the algorithms than necessarily putting it into advertising,” Stephen adds. The strategy paid off. Less than six months after the launch in 2007, iXiGo was visited by more than 105,000 unique visitors, and were chosen as finalists at the Red Herring Global 100 and Red Herring Asia 100, the prestigious list of hot companies in the world and Asia respectively. In February 2008 they received first-round financing from BAF Spectrum, a Singaporean investment fund. Analysing the data between the launch of the site in mid-2007 until mid-2010, the case study found that the growth rates in various traffic metrics were impressive. In terms of both absolute unique visitors and total number of visits, iXiGO achieved an average compound monthly growth rate of 12.7 percent. The average referral conversion rate per visit ranged between 11.8 percent and 68.5 percent. The maximum conversion rate was achieved in December 2008 and decreased by around 20 percent by the end of 2010, arguably attributable to the recession. iXiGO's global travel portal allows users to search directly across multiple airlines, hotels, buses, trains and online travel agencies. Like many travel search engines such as Kayak.com, iXiGO is an ‘infomediary’ allowing the user to independently search for their travel and accommodation requirements. Users specify where they want to travel, on what type of transport, and iXiGO’s proprietary metasearch engine trawls over 100 travel sites to find the best deals. The iXiGO website provides a flight search that allows real-time fare and availability search algorithms, with special tools for Indian travel including a bus and train search. The website includes more than 40 airlines, 30 hotel portals, four bus portals and the Indian Railway Catering and Tourism Corporation. The selective nature of word-of-mouth marketing allowed iXiGO to attract the quality target audience they wanted - those with money to spend on travel - and excluded the window-shoppers. “They are looking for business professionals, for instance, people who travel often, the more affluent, rising middle class of India. It’s on that conversion that the people are arriving or doing a search and then placing that order or buying the fare that iXiGO makes money on,” notes Stephen. As of early 2011, iXiGO have pursued a hybrid revenue model, through display advertising, “Ads by Google”, selling space and referrals, and property owner listing fees. iXiGO receives commissions if users buy their tickets or accommodation having started a search through iXiGO. Hoteliers can also list their hotel directly on iXiGO for a small fee. Aiming for a quality audience with a lower bounce rate (the percentage of visitors who land on the home page and do not navigate further before leaving the site) also adds value to the advertising offered on the site, achieving a higher search-to-booking conversion rate, and a higher average transaction value. Money that might have gone into conventional advertising and marketing instead went into iXiGO’s search engine technology, resulting in a service that gave customers something to talk about. Keeping that conversation among customers going takes time and effort. IxiGO have developed an aggressive social media strategy and customer relationship management, averaging 200 daily interactions on Facebook, and scooping up around 80,000 Facebook fans along the way through puzzles and quizzes to keep their users engaged with their brand. iXiGO’s outreach on Twitter is less well developed. All this has taken customer relations to a new level. “One thing they are doing more recently with social media is making sure they are listening to their customers on Facebook or Twitter or forums, and responding”. The iXiGO team trawls Internet forums and blogs for any relevant comments or posts and makes an effort to respond to every comment, “Usually it is one of the co-founders who personally does this,” explains Stephen. Delta Air Lines, a customer, is a key proponent of this emerging trend. “They have a social media command centre in their headquarters in Atlanta that is open 24 hours a day, seven days a week,” explains Stephen. “There is a team of people monitoring everything that is being said about Delta on Twitter, on Facebook, you name it. There are plenty of stories of them calling up the customer and resolving the issue while they’re at the airport. It’s an amazing new world of customer-relationship management that’s happening in real-time.” Word-of-mouth marketing that is taking place offline is more difficult to quantify. However, in a query of Google blog and discussion searches over a three year period, ‘iXiGO’ was mentioned only 850 times, suggesting that a great deal of word-of-mouth is taking place offline. Public relations have been developed alongside the social media strategy, with 28 news releases published in 2010. “Their strategy is basically to have the best product, the best technology, constantly innovate and improve the product and let the product sell itself,” says Stephen. “Fortunately for them that’s the nice story which has unfolded over the last few years.” The challenge for iXiGO going forward is to decide between consolidating their user base and, at the risk of alienating the established community around their product, continuing to grow their unique visitor traffic. iXiGO’s future growth and business objectives should shape these decisions. Just as business objectives evolve over time, so must social media strategies and customer relationship management. As the case study notes, “it is not immediately obvious in which direction they should head – particularly in their community growth and engagement plans, which will become even more important as they continue to organically grow and expand.” The article is based on an interview with INSEAD Knowledge and a case study which Andrew Stephen has written with Gonzalo Merino Sander, ‘iXiGO.com in India: How to Become the Most Popular Travel Search Engine in India without Traditional Advertising…and What to Do Next’. First published: May 25, 2011 Last updated: May 31, 2011 EB/SK/MR 05/11

Can you innovate your business model?

Can you innovate your business model?

---- by Mrinalini Reddy --- Business models help support strategic goals, but too often executives don't inject them with the necessary dose of creativity to bring about real success, according to new research by two INSEAD professors. When Zipcar launched in 2000, the American car rental company tried something different: it replaced the traditional daily car rental model with hourly rentals as an alternative for short-distance travel. It would go on to earn a much higher hourly rate than its competitors and the company's annual revenues are today approaching $200 million. Also consider service provider LiveOps, a company in the business of managing customer service agents. Instead of employing and training a large workforce in low-cost locations such as India, the company built up a pool of loosely affiliated freelancers, allowing them to work remotely, paying the agents only for the time they served on the calls.  What Zipcar and LiveOps share in their achievements is not some breakthrough in their services but innovation within their business and operating models, say INSEAD professors Karan Girotra and Serguei Netessine. Their findings are published in an article “How to build risk into your business model” in the May edition of Harvard Business Review. These companies differentiated themselves from their competitors by innovating their business models rather than focusing purely on product or technology innovation. They offered existing services to existing customers using existing technologies, but using a different operating model. “There’s creativity in coming up with new products and there’s creativity in coming up with new business models,” said Girotra, an assistant professor of technology and operations management, in an interview with INSEAD Knowledge. “You can invent new products but to really realise the value, it is important to organise and create the right business model around that.” Two popular companies did exactly that. Spanish clothing retailer Zara designed a hyper-fast supply chain to deliver new lines of clothing between two and four weeks allowing the company to keep abreast of evolving and arguably fickle consumer preferences. Likewise, technology superstar Apple created an ecosystem that included not only technology and product innovations but also a whole range of complementary software services.  Checklist for innovating your business model But the challenge with business model innovation is in identifying where and how to make changes. Companies all too often focus on improving three variables—revenues, costs and resource utilisation—the professors explain, but completely ignore the associated business risks. This could include risk related to demand, supply, technology, quality, asset utilisation and many others. Managing those risks and rethinking traditional models can revitalise companies, the professors contend. “Business models come inherent with some risks in them,” says Girotra. “What we are advocating is changing how your business models deals with those risks.” Additionally, it can also reveal unsuspected opportunities for creating value by adding risk, he adds. Companies can spark such a risk-focused approach by first assessing their entire value chain including their buyers and suppliers to identify and ultimately reduce the associated risks. In other words, where in the value chain are the risks associated with creating, supplying and consuming products and services? “In my experience, companies do this very rarely,” says Netessine, a professor of technology and operations management. “They focus more on reducing costs rather than thinking about what kind of risk comes with this cost reduction.” The professors offer a couple of techniques for reducing the risk variables. Speeding up the production process is one way, the professors explain, but it may well entail shifting operations. Zara’s zippy production cycle challenged the supply chain orthodoxy and proved that managing demand risk clearly outweighed the relocation and higher labour costs. “What many traditional apparel retailers did not probably think about was an increase in their risk exposure in [outsourcing to countries with low labour costs],” says Netessine. “Suddenly they have to think very very far in advance about what to produce, how much to produce, where to produce and once a decision has been made, it’s very hard to reverse it because it takes time to deliver goods.” Another approach lies in shifting risk exposure by altering contracts with other stakeholders: employees, suppliers and customers. With LiveOps, for instance, changing the terms of employment from permanent to freelance hires transformed the company’s risk profile where employees now bore the risk of their underutilisation amid call centre downtime. Employees were willing to assume this risk in return for being able to make their own hours and work from home. When it’s impossible to radically shorten production cycles or alter contractual agreements in the value chain, the professors offer another technique that improves the quality of information used for basing commitments. MyFab—an Internet-based furniture retailer—uses a design catalogue to gather customer feedback on furniture designs and only the most popular ones are put into production and shipped to buyers directly thereby reducing its exposure to stock-outs and excess inventory. New risk can create a new competitive edge But the aforementioned strategies can backfire without consideration of new risks created, the professors caution. For LiveOps, a new risk of reliability arose from employing freelance agents and independent contractors. The company in turn mitigated this information risk by monitoring agents’ performance and routing calls first to the best-performing agents. In such situations, the ability to manage new risk can become a competitive advantage for companies. “Risk is not always a bad thing,” says Netessine. “What you might want to do is then take more risk upon yourself and that’s something few managers think about.” In the car rental business, the key risk factor is the underutilisation of the fixed assets--the cars. Traditional companies rent in daily increments even if the customer needs the car for only a few hours. Zipcar challenged this industry standard with its hourly rental rates proving that its returns outweigh the costs of maintaining a large fleet and multiple pick-up and drop-off locations. If there was simply one advantage to driving risk-focused innovation in business models it’s that it’s significantly more predictable and does not require huge R&D expenses, the professors point out. It can be approached in a systematic way and with little expenditure, the professors assert, and relatively clear and credible estimates of the potential benefits and costs can be generated. Further, there’s no requirement for extensive experimentation and prototyping to identify powerful innovations. Netessine cites the example of his native Russia where the government has made efforts to reinvigorate the economy with huge amounts allocated to achieving breakthroughs in technological innovation and nanotechnology, in particular. “My concern is that most of the Russian economy has nothing to do with nanotech,” says Netessine, “it’s mostly oil and gas.” A burgeoning industry like nanotech would take 10, 15 or 20 years to commercialise, he adds. “Most business models [in Russia] are very inefficient or ineffective. With innovating business models you don’t need to spend money on innovation and at the same time you see the results much faster.”  First published: May 27, 2011 Last updated: May 31, 2011 SK/MR  05/11

Creative entrepreneurs can survive the crisis

Creative entrepreneurs can weather the current global economic crisis better than traditional businesses, says Jean-Claude Larréché, INSEAD professor of marketing. Jean-Claude Larréché “It’s not the creative entrepreneurs but it’s the large companies that are being challenged. Creative companies can survive any condition,” Larréché said at the recent World Knowledge Forum in Seoul, South Korea. Virgin Atlantic, which was founded by British entrepreneur Sir Richard Branson in 1984, survived and came out stronger after the airline crisis of the early 1990s when many established airlines went bankrupt, notes Larréché. Speaking via satellite, Branson said a lot of opportunities will emerge as a result of the current global economic slowdown but companies need to be nimble to move quickly and decisively to realise these opportunities. “There are enormous opportunities when there is a crisis. In a situation like this, it’s absolutely essential to conserve cash. I think companies that do have cash owe it to their country and the people in the company to actually invest that cash in order to grow out of the crisis,” Branson says. With oil prices and stock prices of airlines collapsing, Branson said it could be the time to Richard Branson look at whether it is good for Virgin to start an airline in South Korea, Russia or Brazil. “We should consider expanding if (there is) cash to do so.” The best companies with the best products and services survive in a crisis. “You will see other companies all around you going bust and you’ll benefit from that,” Branson says. Government needs to allow companies to go bust, so that new and more efficient companies can emerge, Branson says. The US government, for instance, should allow ailing airlines to go bankrupt so that new and more efficient airlines are set up in their place. Agreeing, Larréché says: “In this crisis, we have to accept the consequences.” To encourage entrepreneurship, governments should do their part to stir competition, Branson says. For instance a merger between British Airways and American Airlines would be bad news for the consumer and governments should prevent this from happening, he argues.  It was Branson’s desire to improve airline services that inspired him to launch Virgin Atlantic, providing travellers value for money service that brought fun to flying. “Virgin Atlantic’s acceptance of British and Far Eastern travellers spurred all of us to start breaking the rules in other areas.” Today, some 40 years since Branson and his partners established Virgin Entertainment, their recording business, the Virgin Group has over 250 companies in its stable. Besides airlines and entertainment, Virgin is into hotels, leisure, finance, renewable energy, telecommunications and even space travel. Virgin Galactic will start its space flights next year, using environment-friendly space launch technology. Apart from promoting entrepreneurship and competition, governments need to regulate when there is not enough regulation, particularly in the banking sector. He says the banking mortgage community should never be allowed “to bring the world almost to its knees ever again. There obviously has to be a better regulation in that area.” Beyond making money, Branson says entrepreneurs must also realise that they have the responsibility to promote greater good. “They have the responsibility to look closely on how they can possibly redistribute wealth for the collective good.” Business people, for instance, should not leave money sitting unproductively in banks. “They should use that wealth creatively to change society and to start new companies. They should expand their businesses in new regions of the world, thereby employing more people and bringing opportunities to areas which are previously being exploited by companies that are monopolistic.” “I’ve always believed that there is no point in going to business unless you’re going to make an enormous and positive difference,” Branson says.

Venture creation: a new form of entrepreneurship?

Venture creation: a new form of entrepreneurship? ---- by Grace Segran, Berlin ---- Fabian Hansmann (MBA ‘06D) has taken a novel approach to entrepreneurship. His organisation, FoundersLink, fulfils the core entrepreneurial functions of identifying opportunities and building a team, a process normally done by the entrepreneur. But then it matches business ideas and opportunities with aspiring entrepreneurs, and also tries to raise funding. Fabian Hansmann “We bring the concept and then we find entrepreneurs to start up and run the business,” says Hansmann. “In other words, we make the ‘Big Bang’ happen. After this magic moment, an incubator could come into the picture and a venture capitalist after that.” Hansmann describes this concept as ‘venture creation,’ a term (as far as he knows) no one else has ever used in this context. FoundersLink differentiates itself in two ways: by being an institutional co-founder and by taking only equity in the new companies. It is only able to generate income by selling shares or by getting dividends. “That means we are only successful if the entrepreneur is successful,” argues Hansmann. “Normal consultants get paid for their services and venture capitalists get a management fee in addition to their carry (from the exit proceeds) from their limited partners. FoundersLink can only make money if the price of the stock goes up.” Business acumen in his blood As a young boy growing up in Frankfurt, Hansmann didn’t know what he wanted to be when he grew up. At the tender age of 12, he started developing software. The next logical step was to bring the software to the market and that’s how he started his first company together with a school friend. The company produced file management software, the Universal File Operator that was comparable to Norton Commander. “The company was tiny but always profitable,” Hansmann recalls with amusement. However, he says his first ‘real’ company was Steganos which he set up when he was 16 years old. The inspiration for the security product of the same name came from a hacker conference he attended in Berlin in late 1994. Hansmann managed the company until 2005 when he went off to get an MBA. Since he was “too busy working to go to school in the early years,” he never got a first degree and is thought to be only one of ten participants to be admitted into INSEAD without one.  Oliver Beste He had been developing the venture creation concept in his mind for a while when, by pure chance in 2007, he met Oliver Beste, the entrepreneur who started myToys.de and made it the leading internet retailer for children's products in Germany with growth rates of more than 40 per cent. Beste liked Hansmann’s venture creation concept so much that he left the company he had started and they co-founded FoundersLink the same year. There was synergy in that partnership because Hansmann had a good network in the software industry and Beste, in the internet arena. The process What FoundersLink does is very simple and no one has done it before, says Hansmann. “We look for business concepts by scouring the net for trends, and we look for potential entrepreneurs – people who are either stuck in their current situation doing the same thing, or their company has gone bankrupt, or those who have just come out of business school and don’t want to work for McKinsey. We simply bring talent and ideas together.” “We create the business plan for our start-ups, incorporate the company and build the organisation by headhunting people who can run the company, substituting us as managing directors,” he explains. “We give the co-founders a stake in the company. For example, for two co-founders, each get 25 per cent and FoundersLink keeps 50 per cent to finance its venture creation business, which by definition is cash flow negative until the day of a successful exit after a few years.” Then FoundersLink supports the entrepreneurs by helping to attract funding from venture capitalists so that the entrepreneurs can concentrate on managing the company. Fine-tuning the process As FoundersLink comes up with the ideas, the selected entrepreneurial candidates sign a non-compete agreement when they enter negotiations. Then they sign a contract and the entrepreneur is required to work for the company for four years “as it usually takes that amount of time for a start-up to be successful enough to have an exit. ” Intially, Hansmann worked with less experienced people because he thought more experienced people would not be enticed by just a concept rather than a thriving business. “But now we’ve found that if we can show people in the same industry that we have the next big thing in that industry and really get them excited, then there are people who are willing to join us,” he says. Hansmann and Beste’s track record for obtaining funding also fosters trust with the potential entrepreneur. Generating income The FoundersLink experience has been that it takes about six months to go from the concept stage to where the company is set up and they have the management team in place. From that point to generating revenue and serious funding takes another six months. At that stage, Hansmann and Beste still invest a lot of time in the new company “but it’s running and generating revenue.” After several rounds of small financing for their companies, they have just closed a deal with Bertelsman, Germany’s biggest media company, for their first company, Deal United, with RatePay, their second company, just receiving financing from the Otto group, which is the biggest mail order company in the world. “Hopefully one day we won’t need seed financing any more but right now, as our companies are high-growth internet companies, we are burning a lot of money and it will take some years before we are profitable,” says Hansmann. The dream As this is a new market, competition is not fierce, says Hansmann. While companies like Rocket Internet or Team Europe Ventures could be seen as competitiors, he feels that there is enough space for several firms. “FoundersLink is pretty much my dream company,” says Hansmann. “It gives me the opportunity to be more entrepreneurial as a venture capitalist and, at the same time, I am not stuck with the same market for 10 years like a ‘normal’ entrepreneur or serial entrepreneur.” Their vision is to bring the FoundersLink concept to other countries, get more specialists onboard and make their business model more scalable. Hansmann’s first real company, ‘Steganos’, recently experienced financial difficulties. So he bought it back with his Steganos co-founder Gabriel Yoran. Chuckling, he says, “that’s really sweet for me. Now I have to resist the temptation to tinker in the development of the products, which is my first love.” First published: November 8, 2010 Last updated: November 15, 2010 GS/MR 11/10

Entrepreneurship: inspiring ambitions

Entrepreneurship: inspiring ambitions

---- by Mrinalini Reddy ---- Entrepreneurs need to have plenty of self-confidence and be passionate about their projects – not just when starting up their own businesses but also when innovating within large corporations. Filipe Santos “The biggest difference I see between managers and entrepreneurs is that managers analyse a lot and entrepreneurs act a lot,” says INSEAD Associate Professor of EntrepreneurshipFilipe Santos, who is also Director of the Rudolf and Valeria Maag International Centre for Entrepreneurship (Maag ICE). For instance, whereas management executives spend a lot of time analysing data and research before crafting a decision, “entrepreneurship is the opposite. You need to have the confidence to act and then learn from the outcomes.” Just ask entrepreneurs such as Tom Adams and Peter Sage (see sidebars). “It’s not about the money,” says Adams, CEO of Rosetta Stone Inc., a language learning solutions provider. “Most people who succeed at being entrepreneurs are doing it for other reasons.” Peter Sage, who’s been at the helm of multiple ventures including mail order, land development and health clubs, says, “The most important environment for an entrepreneur is the internal environment. What is your passion? What is your ability to handle uncertainty? What is your drive?” His latest venture Space Energy aims to deliver solar power collected in space using satellite. A leap into languages Some entrepreneurs are born into the role. Such was the case of Tom Adams who, at the age of 30, became CEO for a family business selling language-learning software. Rosetta Stone may not have been Adams’ creation, but the company’s phenomenal growth during his tenure is testimony to the role of the entrepreneur within a mature corporate structure.  Read more... Energy's final frontier? For Peter Sage, the sky isn’t really the limit. It’s even higher, somewhere around 36,000 kilometres above the Earth’s atmosphere. An entrepreneur with twenty years’ experience, Sage’s latest start-up venture, Space Energy, aims to deliver space-based solar power (SBSP) by collecting and transmitting energy using satellites positioned in space. The catchall: energy on demand, 24 hours a day. Read more... INSEAD’s Entrepreneurship Bootcamp tries to instill the confidence that entrepreneurs will need if they’re to be successful in pitching their business ideas to potential investors. It’s a 48-hour immersion programme in which the participants – INSEAD alumni and MBA students – are put through the rigours of conceiving, developing and presenting an executable new business venture. They arrive at off-campus locations near the school’s Europe and Asia campuses in Fontainebleau and Singapore on a Friday night. Instructors lead students through a series of workshops designed to help them identify ideas, to recruit dynamic teams and then formulate strategies. The final test: a two-minute pitch to a panel of angel investors on Sunday afternoon. The Bootcamp “really challenges people to think about themselves more than anything,” says Santos. “Am I an entrepreneur? Do I like entrepreneurial contexts? Do I have it in me? And can I build the capabilities to deliver?” Getting started Recent studies show that, apart from having the confidence to take calculated risks, aspiring entrepreneurs often find it difficult to pin down the necessary funding. That said, Santos believes you should “never start with raising funds.” He adds: “It has to be about solving a problem, assembling a passionate group of people and coming up with a venture design that you can take to market quickly.” Paul Kewene-Hite His sentiments are shared by Paul Kewene-Hite, recently appointed Adjunct Professor of Entrepreneurship and Director of the Entrepreneurship Accelerator at INSEAD. “I emphasise the team as being the most important, that execution is the next most important, and then the idea,” says Kewene-Hite, who developed and leads the Bootcamp workshops. With two decades of experience with start-ups and building and managing technology companies, Kewene-Hite doesn’t limit entrepreneurship to setting up new businesses. “We need more corporate entrepreneurs and more entrepreneurs in big companies,“ he explains. Consequently, the school has just launched a Corporate Entrepreneurship Initiative to build capabilities and develop new programmes that can help established companies become more effective at launching new businesses. A former technology evangelist at Apple, Kewene-Hite adds: “You can be entrepreneurial inside a machine if you are thinking laterally, if you are thinking about how to materially improve and innovate. If you are proactive, if you are dynamic, refining the questions to get better answers, you are an entrepreneur.” Having an entrepreneur as a role model can help, whether it’s a parent, family member or friend, says Santos, as it can encourage would-be entrepreneurs to look beyond traditional careers and jobs. Downturns can also mean resources are available at a lower cost, whether in terms of office space or talent. But ultimately, to succeed, it will be your innate abilities to discover something you are passionate about, to be able to assess trends, find new opportunities or problems that can be solved differently, and to persevere despite setbacks. It’s not so much a question of finding the biggest opportunity, says Santos, but rather one which fits with your personal goals and beliefs. “It’s wrong to say that the internet is great so let’s all do internet(-related projects). That is a recipe for disaster.” Effective entrepreneurs tend to be contrarians, he adds. They see emerging trends and connect the dots before other people. By the time everyone is doing something, then it is already too late for the entrepreneur. Entrepreneurship at INSEAD In July, the school received a five million euro endowment from alumnus Rudolf Maag (MBA ‘73) to fund the continued growth of the Maag Centre for Entrepreneurship, which was set up in 2003. The Centre runs an Entrepreneurship Accelerator, a series of events designed for MBA students seeking a more focused entrepreneurial education and experience at INSEAD. The highlight of the Accelerator is the two-day Bootcamp. “If anything should validate why (students) need the strategy class and the marketing class and the ethics class and all the different courses that are offered, this experience should really emphasise that,” says Kewene-Hite on how the Bootcamp can complement the MBA curriculum. “(They) should really develop them as practical tools that you can use as entrepreneurs.” Kewene-Hite heads a group of 30 Entrepreneurs in Residence who mentor MBA students interested in entrepreneurial projects. In addition to the Bootcamp, the school also offers a New Ventures elective for MBA students who are interested in becoming entrepreneurs. “The Bootcamp opens the door and the New Ventures course allows them to fill the holes and understand the different elements of entrepreneurship,” explains Santos. The Maag Center offers access to external projects, entrepreneurial sales training, pitch mentoring and a Global Entrepreneurship Forum which brings together alumni and MBA students. The Accelerator complements the MBA entrepreneurship curriculum, which offers 20 electives, an Entrepreneurship day and a Business Venture Competition. Maag has also launched a Global Angel Investing Network (GAIN) to connect INSEAD angel investors and entrepreneurs, relying on the strength of 40,000 alumni worldwide. This month, the Maag Centre has launched a new programme – The Social Entrepreneurship Catalyst - to promote social entrepreneurship and impact investing for the INSEAD MBAs and alumni. “An interesting trend in entrepreneurship is the formidable growth and interest in entrepreneurial efforts that are not focused on capturing value,” says Santos, “but on creating value for society by solving important problems that markets and governments have failed to tackle.” “In essence entrepreneurship is an approach to create value by solving neglected problems through new business initiatives. These initiatives could happen as new commercial ventures, social ventures, corporate ventures, even government-led ventures. The essence of entrepreneurship is solving problems in innovative, practical and sustainable ways. Our society needs more entrepreneurship.” First published: September 15, 2010 Last updated: September 22, 2010 SK/MR 09/10

Picturing the art of business

Picturing the art of business

--- by Emma Beer --- Put creative design and MBA students together in the right environment and the best of business and innovation can rub off on both. INSEAD MBAs visit the Art Center College of Design in Pasadena, California.  Could you describe the place where you go to work without using words? That’s the task that confronted 20 INSEAD MBA students on an exchange trip to the United States as part of an innovative theory that teaches the value of creativity in solving complex problems. So-called “design thinking” has grown in vogue in the past 10 years, and was a concept coined by David Kelley at Stanford University’s Institute of Design. The aim of the week-long field trip was for the MBA students to glimpse how design thinking is taught at the Art Center College of Design in southern California. The idea was to get the students out of their analytical comfort zones to see problems and solutions the way a creative designer might, stretching those logical trains of thought in other directions. One workshop set them the objective of “visualising what INSEAD means without using words” - not an easy challenge, and not a PowerPoint slide in sight. The results opened eyes. For MBA student Grace Chu, the course “really broadened my horizons with respect to the importance of innovation in any business. It’s not just about being creative but there is a process, which, when done right, can be extremely powerful.” Thinking outside the box Many of the students found that their preconceptions about the skills of design students were overturned. “They [designers] are accustomed to thinking outside the box,” says Chu. “MBAs are trained to think in a certain way and to ask the “right” questions. Designers tend not to ask a lot of questions, but just do. They are also as business-minded as any MBA.” Other MBA students weighed in with similar insights from the exchange. “It made me realise that I would enjoy working in a much more creative environment than in a “regular” job, which I had before,” one student observes. “It was pure enjoyment to work with the Art Center students as their take on each and every problem was significantly different from ours.” The opportunity to work together much as a creative team would in real-life business was instructive. “The Strategies for Product and Services Development (SPSD) education is indispensable and is something that everyone should experience because of its direct and realistic correlation to real world teams,” another MBA student notes. “Seeing the business side of a product design project made designing more of a reality for me. It turned once intangible product designs into a possibility.” INSEAD introduced the exchange with the Art Center College of Design in California in 2005 to bring together MBA and design students to learn and experience the process of developing new products and services. Each year, 10 design students from the Art Center College of Design spend four months at INSEAD in MBA elective courses related to innovation and 20 INSEAD MBA students take a one-week field trip to southern California to learn about design thinking. The field trips in California this year explored the design studios of major corporations including General Motors Advanced Design, Disney Consumer Products and the studios at Paramount Pictures to see how design and business is managed in the real world, from a concept through to the production line. In turn, students from the Art Center College of Design learnt from their exchange how to survive and succeed in a business context. One designer student observes: “As a designer, you are taught to assume that the “business” is always against the “creative”, but the collaborative effort of our SPSD team showed me the potential power behind a successful pairing of the two disciplines.” Changing career paths In some cases this elective has changed career streams for participants. As a qualified doctor, Frank Drummond (MBA ’06J) began his MBA wanting to improve his hospital management skills. But teaming up with two design students to design a mobile phone for seniors triggered a rethink on the next phase of Drummond’s career. Now as a serial entrepreneur, he produces everything from telecommunications products to baby bottles, with international distribution. “Take as many of the entrepreneurial electives as possible,” he advises business students, adding the electives showed him that “it is feasible and do-able to start your own company”. First published: July 25, 2011 Last updated: July 28, 2011 EB/JC/MR 07/11

Can your business plan survive this stress test?

Can your business plan survive this stress test?

---- by Grace Segran --- The road to success is littered with the wreckage of strategies gone awry. Here is a six-step stress test for your strategy. More than half of the ideas and strategies that look good on paper get ‘lost in translation’ between the executive suite and the workforce. Why? INSEAD professors Michael Jarrett and Quy Huyhave researched the subject for the past 15 years and have developed an easy-to-apply stress test for business strategies “We know that over 60 percent of strategy execution fails and what the six-step stress test does is that it reveals the cold reality and problems in the business plan by showing the hidden elements of strategic execution as hidden traps in making the strategy work,” Jarrett told INSEAD Knowledge. Executives tend to assume that if you put a lot of thought into knowing what to do, then execution is relatively easy, says Huy, whose research focus is on strategy execution. He argues that this is a false assumption as formulating a strategy is only five percent of the task; the remaining 95 percent is about strategic execution, and that’s where most of the strategies fail. “So we have designed a set of frameworks with probing questions that allow an executive to think systematically, deeply and comprehensively about all the key issues that he or she must consider in order to make their strategy work.” Strategy Execution Stress Test 1. Do you have a viable strategy? 2. Do you have a comprehensive implementation plan? 3. Do you know the hidden barriers to implementation? 4. Do you know how to overcome the barriers? 5. Do you have the critical skills? 6. Do you have a continuous learning system? The stress test gives executives some insight as to why there may be big, lesser known problems that await execution, and gives them a handle on what to pull in order to make the whole thing work. The professors feel that some of the approaches they have are counterintuitive to what’s out there in the rest of the market. “Take, for example, emotions,” says Jarrett. “In business, emotions are usually something that we run away from, and typically we move into our rational approaches. What that does is make us even more defensive and lose touch with what’s really happening. What we’re saying is you actually need to look at emotions, work with them, and that’s how you help people to get the strategy implemented.” Checking for a viable strategy The first stress test helps executives think about whether they have a good strategy in the first place. Does the strategy make sense even just on paper? Is it going to create value? Have they got the right customer base? The test draws on a variety of strategy models to help people understand where they are positioned and assess the business value of such strategic positioning. Quy Huy “There’s no point in moving to the next step of executing it if they realise through the various frameworks that the strategy is already shallow and weak to start with,” Huy says. “In that case, it’s a good learning point and there’s no point in investing your time and company resources much further in executing a bad strategy.” Planning comprehensively Huy says that executives have been trained to think that once they have a strategy, they should work on having a structure. Once that’s done, the executive feels his work is mostly done and the rest will be relatively easy. “But that’s false security. That’s where they get unpleasant surprises most of the time. The second stress test has a series of indicators that help executives think through,” to develop an implementation plan that includes much more than structure. Knowing the hidden traps You’ve got the right strategy and a lovely project plan. So you are ready to go? Jarrett says, no, because when you are implementing strategy and people are involved, things go awry. There are a couple of things that they’ve identified from their research that could go awry. First are the hidden cultural impediments that have grown surreptitiously over time in a successful organisation. “IBM failed during the 1990s, partly because its culture became gradually arrogant vis a vis its customers and thus could not respond to the changing needs of the market at the time,” says Jarrett. “Another hidden trap that we know is that organisations tend to have in and out groups. So there’s the taboo political dimension. I’m not talking just Machiavellian politics; I’m talking about inter-group rivalry, and this can break down the cohesion in the organisation,” he says. “The emotions and the non-rational elements override the spreadsheets. What’s worse is that people don’t know it, deny that they exist, or they don’t see it coming. The third step in the test helps executives identify the barriers in their own business plan.” Overcoming the barriers to execution Step four focuses on a number of research-based tools that have been developed to help executives overcome the barriers, such as, how to mobilise the emotional energy of people over a long period of time. “That’s something that many executives have not been trained to do,” says Huy. “We would focus people on thinking about the time dimension of execution, such as the timing and pacing. When do you do certain things? Are you going too fast? Is this in the correct sequence? It’s like eating a good French meal. Dessert doesn’t come first; in fact, the same dishes served in the wrong order disrupt the whole dining experience. To make the strategy work, you have to observe the right sequence of actions, the right timing and the right pacing.” Developing key competencies Michael Jarrett The problem in a world with social media is that everybody thinks they know everything about everything and people tend to draw on social psychology by reading the back of a magazine, says Jarrett. So executives have a sense that they know what needs to be done. “But it’s not just about knowing, it’s also how can you translate abstract knowledge into action. Research suggests that some sixty percent of managers don’t know how to implement change; they don’t have the skills. That’s the piece that we’re really trying to address. That’s why the fifth stress test does a skill audit around the key competencies to make change work.”  Building a learning organization Having obtained the skills, the sixth step is about replicating and implementing them in the system so that the organization learns collective execution over time. “It’s about getting the executives to fish for themselves and incorporating the skills into the core competencies of the business,” says Huy. Fine-tuning the stress test Huy says that although one can rely on a general set of frameworks to help executives in almost any part of the world think more comprehensively and deeply in making their strategy work, people from various countries and cultures can react to the same type of communication or management action very differently. And so their next research would be to take their framework and adapt it to even finer cross-cultural differences. “And on the other side of that, we are looking at a deeper level of how these soft defensive systems within hard structures can be moderated, and what roles senior executives might play in making beneficial change more sustainable,” adds Jarrett. Quy Huy is a professor of strategy and Michael Jarrett is an affiliate professor of organisational behaviour at INSEAD. This article was written based on an interview with INSEAD Knowledge First published: April 20, 2011 Last updated: April 28, 2011 GS/MR 04/11