decision making – Dutch Uncles

Top 5 Pricing Strategies for a Small Business

Anju Nambiar — Wed, 24 Mar 2021 09:10:04 +0000

Pricing is crucial for a small business mainly because it’s important to strike a balance between competitiveness and the value added by your product or service in the market.

Showing the lowest or even the highest price among your competitors are both equally wrong approaches while introducing your product or service for the very first time in the target market.

Top 5 pricing strategies

Choose between the lowest and highest price points in the market

Two pointers which are indisputable for small businesses is one, to never choose to offer the lowest price. You can be somewhere in between the scale for your product/service/market and even close to the highest. But the lowest offering is off-limits since it can hurt a small business’s entry into the market.

Another rule is to never establish pricing based on pricing alone. It’s important for small businesses to consider other factors while deciding price.

Determine affordability of your customers

Compare the spending habits of your potential customer base with the value you are offering. Are your potential customers willing to shell out big bucks for the value you are providing, or do they have strict spending habits? Keeping these two as deciding factors, formulate a strategy which agrees with the customer budget while being fair and profitable for what you have to offer.

Informed decision-making

Informed choices must motivate your decision making while settling on a suitable pricing model. Being informed and aware of your own challenges, the targets you need to meet and the financial commitments you need to fulfil are foundational in choosing a strategy.

Choose from existing pricing models

There are several existing pricing models to choose from which small businesses have utilised successfully in the past like Cost-plus, value-based, penetration pricing, price skimming, and competitive pricing. These are tried and tested models which your small business can choose from after deciding what’s best for your business.

Small businesses should not be desperate to gain permanent hold of the market share since this can also hurt them. Instead of engaging in a constant pricing battle for getting a firm grip on the market share, small businesses can instead focus on building brand reputation and adding value to the market through unique products/services after in-depth market research.

Perform regular in-depth market research

The last and best strategy for coming up with the perfect pricing model is to perform regular and deep market research right from the moment you sit down to set prices for your products and services.

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Formulate a pricing strategy which agrees with the customer budget while being fair and profitable for what you have to offer.

What’s in it for me?

If we have to pick the top 5 strategies for small businesses, it would be the pricing models mentioned above. However, choosing a pricing model is not as simple as picking one from a list.

It depends on various factors, the nature of your business, what competitors are doing to some extent, and most importantly on the market.

Two mistakes small businesses can make is to focus only on pricing and to aggressively battle it out with competitors for pricing. Start-ups and small businesses should instead be immersed in creating the best they have to offer while nurturing a reputable brand name and make an unshakeable place for themselves in the market.

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How is Workday Innovating Human Resource Management

Shalmoli Sarkar — Fri, 26 Feb 2021 06:35:04 +0000

There is no denying that the amalgamation of technology in human resource management has disrupted conventional employee management in the corporate world. From, AI-based hiring to Big Data infused performance appraisal, the seamless technology integration in HR functions has eased the job. However, in a bid to reduce spending and hire the best of talent, new models of workforce like the gig economy, remote working, and AI-powered digital workforce are mushrooming and being adopted by corporates. With newer workforce models emerging, we need to revise our earlier deployed human resource management tools and processes. This calls for innovation in Human Resource Management (HRM) and this thought of innovating HRM as per the dynamic environment has been understood by Workday.

Founded in 2005, by David A. Duffield and Aneel Bhusri, Workday is an enterprise cloud software provider for financial management and human capital management. It delivers human capital management, planning, and analytics applications for the World’s Fortune 50 Enterprises.

Workday- Reshaping the HR management with technology

Charles Darwin had once said, “It is not the most intellectual of the species that survives; it is not the strongest that survives, but the species that survives is the one that can adapt and adjust best to the changing environment in which it finds itself.” In this scenario, the changing environment is driven by technology that is transforming every job. Those HR leaders will come across as survivors who can effectively manage the workforce while remaining agile to the changes.

Workday has developed and built solutions that can support a diverse and distributed workplace.

Elevating employee experiences by Machine Learning

Workday People Experience

By deploying Machine Learning, Workday is curating personalized experiences for each user. This product will aid the HR manager to gain insights about every employee in the organization and help in guiding career development to its employees. It can effectively process a large number of queries from employees regarding payroll systems. Workday People Experience increases productivity by quickly addressing issues. It enables the employees to seamlessly access information, tasks, and seek answers from any third-party source or application.

Talent management with Machine Learning

Backed by Machine Learning the Skills insights solutions of Workday helps HR managers to determine skill gaps in the organization by analyzing the existing skill set. This feature proves to be beneficial when the company is working towards a new business offering. The HR manager can leverage real-time dynamic footprint to understand if the employees possess the right skills to do the job. From the skills’ graph, the relationships between skills and job descriptions can be mapped.

Talent marketplace

It is a talent mobility platform that enables companies to find and borrow talent, and identify skill sets based on the type of projects, gigs, and other opportunities. Let us say, for instance, an employee who is interested in exploring new projects will receive opportunities to work in a different department based on the skillset the individual has.

Decision making simplified using Data Science

Workday People Analytics coupled with augmented analytics gives business leaders visibility into the most critical trends of the organization and its drivers in a story format.

Workday’s Discovery Boards, a drag and drop data feature helps users to quickly visualize data for forecasting financials, identify patterns, understand people and discover insights. HR managers can use Discovery Boards to understand the grey areas of business and understand where potential skill gaps might exist.

Workday’s acquisition with Peakon

With the onset of the pandemic, the workforce model has transformed to work-from-home that has its own set of challenges. 2021 started with Workday acquiring Peakon, an employee success platform to provide a continuous listening platform for employees. In a remote working model, the communication with employees is limited due to which the company is unaware of employee challenges countered. Thus, the companies must develop a system to resolve employee grievances effectively. The continuous listening platform will help understand employee sentiment, provide real-time visibility into employee experience, facilitate ongoing feedback and provide recommendations for actions. It will empower the HR leaders to gain insights into employee feelings, demands, and behaviour, thus fostering an inclusive work culture with improved organizational performance.

What Startups Can Learn From Workday?

Startups who are yet to begin their entrepreneurial journey should understand the drawbacks of employee attrition in the early stages of the business cycle. This would eventually lead to spending more money and significant time on recruitment causing a decrease in productivity. Therefore, understanding the challenges, skills gaps, arrangement of relevant training and learning programmes for new projects can prevent employee attrition and empower the employees. With new remote workforce models emerging, the startups or small businesses should leverage technologies like ML, AI or deep learning for an improved workforce management.

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Entrepreneurship is Not for Everyone, Are You in The Right Business?

DU Desk — Mon, 25 Jan 2021 06:03:40 +0000

Highlights

What makes someone an entrepreneur?
Entrepreneurship and business are two terms often used interchangeably in common parlance but there is a lot of difference between the two.
Entrepreneurship is all about intent and innovation.
There are five kinds of businesses often confused with entrepreneurship-lifestyle business, professional practices, home-based business, trading and local businesses.
Any of these businesses can be turned into entrepreneurship with the right intent and vision of the entrepreneur.

Chef, the 2014 American drama, starts with an altercation between Carl Casper, the head chef and Riva, the owner of Gauloise, one of the biggest restaurants in Los Angeles. Carl eventually loses his job as Riva pushes him to “stick to the classics” rather than innovate new dishes. The film has much more to offer than a few titillating close-ups of Yuca fries and barbecued brisket. At its core, Chef is a movie about Carl’s entrepreneurial journey from losing a well-paying job to running a food truck serving Cuban cuisines that eventually become hugely popular with the local population through social media. But this lends itself to our question of the day: what makes someone an entrepreneur? Is it the mere act of starting a new venture or does it take much more than that? What differentiates a business from entrepreneurship? Is there a difference at all? We aim to have a clear answer by the end of this piece.

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The first distinctive function of entrepreneurship is identification of a problem and a pursuit of solving it. A business might or might not be solving a problem.

Entrepreneurship v/s other businesses

1. Entrepreneurship and business are two terms often used interchangeably in common parlance. To understand the differences, we should first try to understand each concept separately. A business is usually defined as an entity or an organization engaged in a commercial activity or a service with a pre-defined end goal in mind. This may still sound a lot like entrepreneurship. Right? In fact, entrepreneurship can be seen as an extension or an evolution of a business venture.

2. The first distinctive function of entrepreneurship is identification of a problem and a pursuit of solving it. A business might or might not be solving a problem. For example, if there are four ice-cream parlours near my house and I decide to run a fifth one. I’m surely starting a new business but I’m not an entrepreneur till the time I solve a unique problem, or innovate in a way none of the others are able to do it.

3. The key difference between a business owner and an entrepreneur on the face of it is indistinguishable but if one looks closely enough, they’ll be able to spot it. For a business owner the administration of his/her business, short-term gains, logical and linear growth matter a lot. This is not cast in stone but these are observable characteristics. A business owner would focus more on measurable results rather than taking a leap of faith and innovating something. They would generally want minimal risks and a predictable behaviour out of their business.

4. Another characteristic that differentiates the two is that entrepreneurs are risk-takers while for someone running a business, profit is the major driving force. They often think of changing the world around them and making a difference through their work. But the important point to understand here is that a business and an entrepreneurial venture are not static and mutually exclusive. It is possible for a business to turn into an entrepreneur venture if a businessperson has the right intent to do so.

Entrepreneurship and its defining characteristics

Think of any Indian entrepreneur of recent times. Names like Bjyu Raveendran, the founder of Byju’s, Ola’s Bhavish Aggarwal and Oyo’s Ritesh Agarwal would be one of the first ones to come to your mind. All of their stories have some basic common elements like intent, conviction and a willingness to solve a problem in hand. Their start-ups weren’t profitable for the longest time but that didn’t deter them from trying again. Had any of them approached it with a business outlook rather than an entrepreneurial spirit, they would have been more concerned about developing a successful revenue stream, growth curve, expansion strategies, etc. rather than trying something new and being persistent about it.

Understanding different kinds of businesses

Most entrepreneurs can relate to the journey of finding a passion and establishing it enough so that it can be called a ‘businesses. The first and the foremost question for every entrepreneur is to understand different kinds of businesses before actually starting one. One would ask, why’s it important to know what business is right for them? The answer lies in this humble quote by Lewis Carroll: “If you don’t know where you are going, any road will get you there.” For early entrepreneurs to know what road to take can be easily confusing if they don’t know where they want to go with it.

Five different kinds of businesses are lifestyle businesses, professional practices, home-based business, trading and local businesses. All these businesses have distinct characteristics but they might or might not be entrepreneurship by nature.

Lifestyle business and entrepreneurship

A lifestyle business is mostly dependent on one factor: your lifestyle. This kind of business is essentially the one that helps you support or enable the kind of lifestyle one wants. This is probably also the reason it gets a bad rep in the entrepreneurial community. Entrepreneurs see themselves as someone who is willing to give up on basics in order to see profitability for their company and if something’s left, then take something for their own selves. Its only aim is to provide a good lifestyle to the owner of the company who usually runs the business on his own funds, savings or small business loans.

Key differentiating factors of lifestyle business when compared with entrepreneurship is that an entrepreneur will think of a new idea and an innovative means for that idea to succeed whereas for a lifestyle business, the sole purpose is to support the owner’s needs through the business.

Professional practices and entrepreneurship

In today’s times, people often confuse professional services like web designing, freelance writing, audit firm, financial advisories, law firms, and consulting firms, etc. with start-ups or entrepreneurial ventures.

Professional services business is usually a break away from a traditional setup process. It is easier for small businesses to reach out to them and get their services at a cheaper price which a large-scale firm might or might not be willing to take. However, it is also very likely for an entrepreneur to be born out of the traditional industries but it is the intent that makes all the difference. If X quits a company and provides the same service or a product independently, that’s not entrepreneurship. But if X has the capability of recognising a problem within the same industry and starts a company after identifying those pain points, that same person will become an entrepreneur.

The perfect example of a professional service-turned-entrepreneurship that comes to mind is Gurugram-based firm Toffee that wants to change insurance for millennials. The company is founded by former insurance executives Rohan Kumar and Nishant Jain, and it offers ‘micro insurance’ or smaller insurance packages called ‘toffees’ for millennial-specific needs like a 15-day backpackers’ insurance, or an anti-dengue insurance. An established insurance company might not be able to give such personalised insurance policies. That’s where Toffee has a chance to add value.

Digitisation has given new wings to the professional services business. They now have a platform to monetise their assets and services and through subscription-based packages. Customers also get a better deal as these businesses are mostly focused on desired business outcomes. One can choose to either remain into professional services if there is enough demand or turn into an entrepreneur by innovating within the framework of the existing industry setup. It takes that one extra step to turn into an entrepreneur from a simple business-minded framework.

Home-based businesses and entrepreneurship

What do Apple Inc., Hewlett-Packard and Amazon.com have in common? These are certainly not the first companies that come to your mind when you hear the term ‘home-based business’. But that’s what forms a common ground for them. Many businesses like them started as home-based companies and have now expanded to become larger corporations.

But what’s the difference between these companies and lakhs of others that operate out of a garage or a home-based setup? The answer is vision. These companies were envisioned to be where they are today. They were never meant to be just a home-based business. This is the main difference between a home-based business and entrepreneurship.

Some of the advantages of a home-based business are flexible work timings, work-life balance, low input cost, and a near-close guarantee of quick financial success. It’s very important to choose a business that’s not saturated so that it’s not too challenging for business owners to start. Many people also choose to do it on the side and then later monetize it to break-even with their full-time jobs.

The COVID-19 pandemic has given way to many such enterprising minds to turn their home-based business to a helping hand in times of crisis. Spriha Neogi, a former Google employee, has fulfilled the target of making one million masks to be distributed amongst stranded migrant labourers, the transgender community, slum dwellers, and police personnel, etc. In March, she put a post on Instagram asking for volunteers who could stitch masks. There are many such examples of how home-based business can be used to make a difference in society and also create value through one’s initiative.

Trading and entrepreneurship

Trading usually starts as a way for people to make some extra bucks on the side but more and more people are now considering the possibility of turning it into a full-time revenue stream. There are two ways in which people can indulge in trading as a business: either they trade as individuals or sole proprietors or trade through a business entity. Someone who runs a trading business would identify trade-worthy markets, create a demand for a product and successfully create business by getting more and more buyers to invest in his/her product. The word entrepreneurship is rarely associated with financial traders. That is because they essentially act as a bridge between the product and the customers and their “business” is not really concerned with innovation, creativity or manufacturing.

Like lifestyle business, trading is also considered to be driven by personal goals of the owner and is therefore far away from the traditional concept of entrepreneurship. An entrepreneur rarely thinks of profit-first and is often focused on problem-solving rather than think about business models that make money right at the start. In contrast, for a trading business to work, money is a key driving force and hence till the time one doesn’t innovate the business model, he/she in trading business cannot be termed an entrepreneur.

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If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life.

Brian Chesky, Co-founder, AirBNB

Local businesses and entrepreneurship

Last but not the least, we come to local businesses. Out of the all five categories that we’ve discussed. Local business comes the closest to entrepreneurship, as we know it. Often, the most defining characteristic of a local business is that it’s scalable and has the potential to be replicated.

Out of all the businesses that we have discussed so far, local business comes the closest to entrepreneurship because it is well versed with the problems, demand structure and area-specific concerns of their target audience. A local business owner is in a very good position to turn his business into an entrepreneurial setup. The most distinct characteristic of a local business is that it creates goods and services targeted at a particular local population. It can either be a small business or a large one, but local target groups are the key.

A local business is often also called “brick and mortar” business. Opening up of digital marketing activities have given even physical businesses a reason to reinvent themselves and think out of the box. They now have access to digital media promotions and online listings to use in their favour for wider online visibility and a hope for greater conversion rate.

Why the confusion?

There is often a lot of confusion when it comes to telling business and entrepreneurship from one another. The real question is “What do I want from my business?” One needs to be clear why they’re getting into it and what’s their expectation, both in the long and the short term. While starting a business, it’s important for an individual to have a clear understanding of their vision, aim and end goal. Start-ups sound very glamorous and there’s an enigma attached with it but people need to look beyond the greys while making a decision to start something new.

Airbnb co-founder famously said Brian Chesky, “If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life.” One can’t be forced to become an entrepreneur. People who fail at various businesses lack the theoretical understanding of the concept of entrepreneurship and what kind of business they wish to set up or what is the problem that you’re aiming to solve. There needs to be an introspective questioning of the mind long before one sets out to set up a business.

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To Do or Not to Do? – The Dilemma of Decision-making

Tanisha Achrekar — Mon, 21 Dec 2020 07:27:34 +0000

When you decide you want to buy a new shirt or a new dress. You go online and check several options. With several apps and websites that are selling dressing, your pool to choose from is bigger than ever before! Having so many choices is definitely a privilege but it is also making it more difficult to choose one. Having several choices has given rise to a whole new kind of impulsive and indecisive buyers. The same goes for the business world, say you are hiring a software engineer for your company. You will get hundreds of candidates on LinkedIn. The more choices you have, the more confused you are likely to be while choosing the best candidate, clothes, food, or anything. We live in a world where we are constantly bombarded with options, choices, and replacement. This makes the skill of decision-making worth harnessing now more than ever.

Decision-making is a mental process and must-have business skill. A survey conducted by the Harvard Business Review in 2010 found that there is a correlation between decision-making and financial results 95 per cent of the time. The companies that have great decision-making skills tend to perform better than their competitors.

Different styles of decision-making

There are different ways to go about effectively making business decisions. Each and every entrepreneur has his own style and way of thinking. Though overall the way decisions are made can be divided into three vast categories:

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You can't make decisions based on fear and the possibility of what might happen.

- Michelle Obama

Psychological

A psychological decision is clearly subjected to how an individual feels. It depends upon what are his or her needs, preferences, mindset, ethics and perspective. It totally revolves around an individual making all the decisions.

Cognitive

A cognitive system is one where the decision maker and the ones who will be impacted by those decisions function collectively in an integrated manner. Here the decisions are discussed, assessed, and suggestions are made accordingly. The decision is open for discussion as reactions and suggestions are received.

Normative

This method is usually how group discussions go about in an organisation. Obviously, when there are so many people involved in decision-making, communication is the key. Here the organisational norms and logical discussions are the key part of the process.

The seven-step process of decision-making

The go with the flow mindset does not fit quite well in the business world. Every crucial step of an organisation is well-planned and decided before implementing it. There are several ways you can make a decision regarding your business. The most sought-after way to go about it being –

What are you deciding about?

Before beginning the process, it is vital to know what you are deciding about. There should be clarity regarding what a decision needs to be made. If you fail to understand clearly the setback or the opportunity, the decision you make about it might probably not be the best.

Be well-informed about it

The best decisions are the ones that are well-informed. Once you know regarding what you are making a decision, gather all the data about it. Suppose you are deciding whether or not you need to hire an accountant for your startup. Think about how the current accounts are being handled by you or your manager.
Analyse how hiring an accountant will make a difference or is it basic calculations and it can be managed without any professional help. Then consider the amount you will be spending hiring a new accountant. There are plenty of things to know and consider while making your decision. After all the considerations, the pros and cons and the long-term impact assessment, make the decision. The best decisions are the ones that are well-informed.

Look for alternatives

Businesses have constant requirements and needs. Consider what suits you better, hiring an accounting firm that manages your finances or an accountant. Look for hitting two stones with one bird by hiring tax and accounting consultants or firms that manage both your account and taxes. While making decisions, it is necessary to consider all the possible alternatives. As usually there are several ways to meet the same goal. Find the one that suits your business the best and offers value for time, efforts and money.

Analysing the multiple alternatives

Once you have jotted down several alternatives, start weighing them against each other. See what has worked for organisations in the past in a similar situation. Then see how you can do things differently and better. We keep weighing options against each other all the time. When you are hungry, the end goal is to feel full. Now you can either fill-up on the tasty junk or have a healthy meal, have a home-cooked meal or order takeaway. Depending upon the time you have for cooking, your food choices, your budget and your diet, you will end up factoring into your decision-making process.

Finally, the verdict is here!

After brainstorming and contemplating all the options and alternatives, the next step is making the decision. The decision you have made at this point is clearly impacted from all the steps above. Having clarity, gathering information, looking for alternatives and weighing them against each other is important to make the best possible decision. This method works in any and every decision-making crisis that a business comes across.

And… Action!

It is time for implementing the decision that you have made. Make a tangible plan based on your decision and start acting on it promptly. Assign tasks to all those who will work towards making your plan a reality. Proactively get started as a delayed action may lead to loss of opportunity. When college students are contemplating which colleges to apply for and are busy researching about the best colleges for them. The ineffective decision-makers usually miss the admission dates.

It’s review time

Once you have made the decision and implement it, observe how it performs. Are you happy with it? Are things going as you thought they would? Is everyone impacted by it satisfied with your decision? If the answer is a strong ‘yes’, the decision needs no alterations. However, if that answer is ‘no’, then conduct discussions, identify the setbacks and come up with solutions for the problem at hand.

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Whenever you see a successful business, someone once made a courageous decision.

- Peter F. Drucker

Techniques for making decisions

Decision-making techniques help in reaching your goals more effectively and in turn produce better outcomes. Some of the best techniques worth considering are –

Be more process-oriented
When your job is not only to make the decisions but also getting it implemented through others, a process-oriented approach seems the best way to go about it. Having a process in place will have a set way of getting things done. You can also form a process involving the steps above that best suit your business.

Get your team together
When you alone are making a decision, you are likely to have a tunnel vision. Involving your team in the process will help you to view things from different perspectives. Bringing different ideas and viewpoints to the table will only lead to generating an effective decision.

Induce a collaborative mindset

While making any decisions in an organization, the mindset of everyone involved should be taken into account. Work on uplifting your employees and create a mindset where their inputs are taken seriously.
Also, the approach should be more towards making the best decision overall as a team rather than employees defending each other’s opinions and downplaying their weaknesses. Instead, the focus should be on collectively addressing the questions that stand while making decisions.

Create psychologically safe environment

In research done by Google, it was found that psychological safety is largely attributed among teams that perform well. It is obvious that a team where employees feel safe and respected will have better communication than the one where they feel they are condescended or ignored. A lot of great ideas will be thrown out of the window if employees don’t feel psychologically safe to share them.

Reiterate the goal behind the decision-making

Every decision that is made in an organisation is with a set goal in mind. A simple decision like framing the leave-policy of an organisation is with the goal to promote work-life balance for employees without hampering productivity. It is important to not lose sight of the goal while getting involved in the decision process. Keep revisiting the goal to remind the entire purpose of making the decision.

As an entrepreneur, decision-making is an integral part of your journey. Your business will evolve and so will your process and strategies. The challenges that come your way will only enhance your decision-making capabilities. Along with decision-making, problem solving skills also go a long way in making the best business decisions. Read our article on ‘problem solving’ to know more.

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