This is probably something that you would be asked while interviewing with a management consultancy firm. But this question popped up in my mind while enjoying yet another bite of this strangely irresistible (and unhealthy) food. So I set out to find the answer to this question. There were two approaches. The first was to approach it in the way that one would in an interview i.e. by making initial assumptions and using a few heuristics, one would be expected to figure out the solution to this problem. As the interviewer would say, yada yada, we don’t want an accurate answer from you, yada yada, we just want to know your thinking process. But with the convenience of the Internet and the lack of pressure of being in an actual interview, I wanted to find out a relatively more accurate answer to this.

The first step was to find base data. Was there any pizza chain that had shared their consumption/sales figures? I was in luck. What is the first brand that comes to mind when you want to have pizza (at least in India). For most people, it would be Domino’s. In India, Domino’s is owned by Jubilant Foodworks Ltd, a publicly listed company. This would mean that it would have shared some details of their revenue/sales in one of their annual reports. This was the first piece slice of data that I found in their 2012-13 annual report.

Looking at the various emerging trends, the organised sector in FSI, which currently accounts for 30% of the business, is expected to account for nearly 45% of the total food service sector by 2015.

This would mean that Domino’s falls under the 30% of the organised sector. Further,

As India’s largest and fastest growing food service company, Domino’s Pizza India enjoys a dominant 62% share in the organised pizza market and more than 70% share in the pizza home delivery segment countrywide (as per Euro monitor report 2012).

Thus, out of the organised sector, Domino’s has a 62% market share. And lastly,

…it sells nearly 66 Lakh pizzas a month across its network of 576 stores across 123 cities in India.

So by a simple calculation using ratios and proportions,

  1. Pizzas sold monthly in the organised market = 66 lakhs / 0.62 = 106.5 lakhs
  2. Pizzas sold monthly in the total industry = 106.5 lakhs / 0.3 = 355 lakhs
  3. Pizzas sold yearly = 355 lakhs * 12 = 4260 lakhs = 42.60 crores

There you have it. For a country of 120 crore people, 42.60 crores pizzas were consumed in 2012-13. This is, of course, nothing compared to the pizzas consumed in the US. The average figure is 3 billion which is equal to 300 crores.

There are still many assumptions in the above calculation. For example, I’m assuming that the market share mentioned in their annual report is by numbers and not by value. This itself is not likely to be true. The above market share would most definitely be on the basis of value. And because the price of a Domino’s pizza and the price of a pizza sold by a local eatery would be different, Domino’s would have a less market share in terms of numbers than the values mentioned in their annual report. But as I said, the goal is to find a relatively more accurate answer and for that purpose, this assumption seems alright.

This incident took place when I was travelling from Chennai to Mumbai by train. A vendor was selling an assortment of food items including potato wafers, chips and other eatables. As is the style in Indian trains, he was continuously shouting out what he was selling. This mainly included, “Wafers… kurkure…”.

But as soon as he came near our berth, where four of us guys were sitting, he immediately started shouting out “…cigarettes, gutkha, Manikchand…” How’s that for effective customer segmentation? Not that we bought anything from him, but on average this strategy would definitely help him garner more sales. Who says you need an MBA from a B-school to be an effective seller?

“Life after MBA is a 2×2 matrix. And I’m lost somewhere in the 3rd dimension”

Yes, this is what I felt after a couple of hours of wading through a pool of muck. Actually it was a class on Strategy. The material was so dry and abstract that I wondered if this is what the CxOs of MNCs do all day long. Fit frameworks and apply models? If so, it must be quite a drab job up there. I would be better off copy pasting Java code in Notepad. No, there must be something better. Something enjoyable. But while thinking about it, out of my over-active mind came another thought…

If all you have is a 2×2 matrix, you’ll forever be stuck in a flat world.

It’s all in how you look at your job. In the end it doesn’t matter how much you earn or what title you have. Its how much you enjoy doing the work. As Hrithik Roshan immortalized the concept in Lakshya, “Become a grass-cutter if that’s what you want, but become the best grass-cutter you can.” And the surest way to do that is to enjoy cutting grass. That is one point I will keep in mind while taking the first few steps in industry tomorrow. So here’s looking forward to becoming the best grass-cutter I can. I am all packed, ready to go. Oh yeah, but a slight problem, I still have to get a job. 🙂

Before one year – Hum jahaan khade hote hein, day-0 wahin sey shuru hota hai

Before placements – Bhagwan mainey tumse aaj tak kuch nahin maanga…..

During the interview,

Me – Main is resume per haath rakhkar yeh saugandh leta hoon ki jo bhi kahoonga sach kahoonga, aur sach ke siva kuch nahin kahoonga.

Interviewer – I-Bankers ke bayaanat aur sub-prime ko madde nazar rakhtey Taz-e-raat-e-hind, dafaa 302 ke tahet , muzrim ko 5 lakh ki pagaar di jaati hai

Me – Maa, me 5 lakh ka MBA banne wala hu

Mom – Yahi din dekhne ke liye maine tujhe paal pos ke bada kiya tha? Ab hum kisi ko muh dikhaane ke layak nahin rahe

(Prospective) Father in Law – Haraamzaadey! Teri itni himmat! Meri beti par dorey daalta hai! Teri haesiyat he kya hai? Is ghar ke darwaaze, tumhare liye hamesha ke liye band hein

Dost (IIM waley) – Maine tumhe kya samjha, Aur tum kya nikley!

Girl friend
– Mai kahti hoon, Door ho jaa meri nazron sey

Doctor – I’m sorry, hum kuch nahin kar saktey. Ab Sab oopar waale key haath mein hai

Faculty – Bhagwaan pe bharosa rakho. Sab thik ho jaiye ga

Nassim Nicholas Taleb in his book, “Fooled by randomness” writes, “It is said that science evolves from funeral to funeral. After the LTCM collapse, a new financial economist will emerge, who will integrate such knowledge into his science. He will be resisted by the older ones, but, again, they will be much closer to their funeral date than he.

One and only one funeral comes to mind now – the sub-prime crisis, the latest funeral in a long list of never-ending deaths.

P.S. On a related note, MBAs did not cause the sub-prime crisis. We are just not that intelligent.

It is often repeated in global business circles that when the US sneezes, the rest of the world catches a cold. But have you ever wondered what happens when the US catches a cold? Judging from recent events, this is what precisely has happened. With the burst of the housing bubble, US has dragged down many other economies of the world. Even the BRIC juggernaut has slowed down.

When did the turn of events happen? When did sub-prime, which was a catch word in B-schools and a hot topic of discussion, suddenly turn into a monster? We have come a long way since last year. A lot of money has since flowed under the bridge. Last September, the sub-prime crisis had just reared its ugly head but no one could have predicted the level to which it has affected every one of us today. Governments are hastily organizing bailout packages for mopping up bad debts. Age old institutions are going off the radar. Investment Banking as a concept has been wiped out.

As far as India is concerned, the decoupling theory was badly routed. India has not been immune to the global hiccup. Inflation reached alarming levels, the pathetic levels of IIP has demoralized the industry and the stock market have seemed to lost all steam. The irrational exuberance which led the Indian stock markets to record highs till January has been squashed. The exuberance has gone; now only the irrationality remains. Newspapers scream valutions at 2005 levels, but who has the courage or the cash to buy today? Judging from the industry scenario, it seems India is heading for a recession with no brakes. And I’m on that train.

P.S. The above is not a rant, nor a crib. Just a dispassionate look on things which have happened and which are in store.

An article I was reading on ZD-Net had this to say about the effect of the global financial crisis on Indian IT firms.

In fact, Premji, one of India’s richest men by virtue of his share in Wipro, apparently practices frugality to the extent that he orders ‘by-two’ samosas in the office café. ‘By-two’ is a famous local habit, quickly adopted by newcomers, of splitting one order of anything (coffee to soup) between two people to save on costs.

Many of the now bankrupt firms had accounts with the IT giants for developing their IT systems. And since they are no more, the fallout is going to affect the IT industry as well. And here we are being complacent, having McDees and Coke Floats and Subways. Are we being smug about the whole situation? Are we choosing to hide behind a imaginary veil of hope? Has the time to start worrying come yet? Time itself will tell.

1) Murphy’s Law

This is arguably one of the best known and widely quoted laws out there. It was named after Captain Edward Murphy, an engineer in the US Air Force who created it in a fit of frustration. In its simplest form, it says “Anything which can go wrong, will“. Many of you might have experienced a corollary of Murphy’s Law in daily life while standing in a queue. The queue in which you stand seems to always move the slowest. Although you cannot do much about selecting the right queue, in the world of business a manager can use this law to be prepared. In this day and age of highly complex and interconnected decisions, it is prudent to have a contingency plan (or many) if the one you choose doesn’t work out. Software projects may overshoot their deadlines, demand forecasts may go horribly wrong because of sudden rise in raw material prices, or the marketing campaign which you so carefully thought up of may go haywire because the competitor trounced you with a newer product. As a manager, you are paid to make decisions, and unless you learn to anticipate things which can go wrong, you won’t be making much progress in your career.

2) Parkinson’s Law
Work expands so as to fill the time available for its completion.

This is another law which is quite well-known in the scientific and business community. This was first coined in an article in the Economist in 1955, and time and again it has proved to be true. On the outset, this law simply seems to point that it is important not to procrastinate. A manager is supposed to be efficient in doing his work and in allocating the time required for its completion. But if one digs deeper, one can find out at least two hidden meanings.

One is the principle of budgeting. The actual resources for a project will expand to its budgeted amount. This is a very commonly used practice by functional heads while deciding their annual budget. Rather than improving their department’s efficiency by aiming to cut down on the actual resources used, managers actually allow the bloating of resources so that their forecast looks accurate. Moreover having a higher budget for their department can increase their prestige. An effective manager should instead proactively measure and fight any unnecessary bloating of resources.

The second implication of this law is from the field of Economics. It hides in it one of the basic mechanisms of supply and demand. In the long run, the demand for a product increases to match its supply in order to achieve equilibrium. Although in Economics the reverse is also easily true, once the supply decreases, the demand for that product also decreases (due to higher prices). This is not so easily seen in the business world. If the time available for a project decreases, there is a highly likely chance of it overshooting the old and even the newer deadlines by a significant amount. Thus the Parkinson’s Law enables you to prepare your project plans more carefully.

3) The 80/20 Law

The 80/20 law, also known as the Pareto Principle was actually framed by Juran, one of the leading exponents of quality in manufacturing organizations. This law has been empirically observed to be true in so many situations that it has become universally applicable. In its most general form, it states that 20% of the causes drive 80% of the consequences. In a business environment, it can be applied to many situations – 20% of the employees do 80% of the work, 20% of projects will take up 80% of the resources, 20% of the employees get 80% of the salary(?) etc. A variant of this was even used controversially in GE by Jack Welch to categorize employees into three bands. He exhorted the organization to make the top 20% “feel loved.” Application of this law can help a manager to find out which resources are costliest, which customers are most valuable, which employees are hard-working and thus focus resources on these important causes.

4) Hurst’s Law
Complexity can neither be created nor destroyed. It can only be displaced.

This law parallels an oft-repeated adage, “Problems cannot be solved.” For every problem you solve, there arises at least one problem equal in complexity to the ‘solved’ problem. Business consultants would do well to keep in mind this law. Armed with a heap of tools and techniques, consultants work to re-engineer business processes and re-structure hierarchies, promising an effective and efficient organization. But many a times they fail to foresee that the new structure is simply creating new complexities which have not improved the overall condition at all. Managers grappling with supply chain issues can also keep in mind this law to ensure the proper flow of information and resources. The entire value chain needs to be looked as a whole to ensure that the complexity is not simply shifting within the organization. They should instead find ways how it can be actually shifted out of the system.

5) Parkinson’s Law of Triviality
Organizations give disproportionate weight to trivial issues.

Anyone who has been in a meeting that seemed to last forever has come across this law. The frustration multiplies when your bosses are the ones who guide the meeting and you’re but a pawn in the meeting. A very common tendency of managers is to jump into the problem immediately without structuring or organizing the facts first. By not spending time to understand the requirements, one tends to pick up the most obvious problem that comes across and work towards solving that first. But the most visible problem may not be the most important. Following this approach proves to be very wasteful in terms of both time and resources. A manager should keep this caveat next to the Pareto Principle in importance and ensure that by assigning priorities to the problems in front of him, he can apply his resources in the right order and in the right proportion.

6) KISS principle
Keep it simple, stupid

The importance of being precise is constantly hammered by B-schools into students. However a mistake which most newly-minted managers make is to confuse precision with verbosity. Managers are made the butt of many jokes on how they use complex words and phrases even for describing something simple. Thus, “we sell toothbrushes” may turn into “we provide complete oral hygiene”.

Though it is important to be precise to prevent errors, such precision should come from simplicity. As Einstein said, any fool can make things bigger and more complex. It takes a touch of genius and lot of courage to move in the opposite direction.

Saying that your organization engages in continuous value creation may look good in mission statements but a manager should be able to simplify things. Not in a way to leave out any particular detail, but so as to be able to explain the 4Ps or Maslow’s hierarchy to a 4-year old child. Spouting out management jargons may impress your peers at the annual industry seminar but will always leave your subordinates confused after they come to you for clarification.

7) Unintended consequences
Any action taken purposefully will produce some unintended consequences.

This is a law which parallels Murphy’s Law, but unlike its more famous counterpart, this adage actually allows positive side-effects. This may ensure that a company may find a new use of a previously scrapped product because the government has changed regulations or even the fact that getting fired from a job gave you a chance to develop that entrepreneurial spirit in you.

Although possibly apocryphal, the story of how 3M failed in its quest to develop super glue and instead created one of the most useful inventions in history – the Post-it note is proof enough of this concept. Another example of this law at work in the business world is Adam Smith’s invisible hand concept. An individual aiming to better his interests may actually produce certain consequences which were totally unintended in the beginning. This law ensures that a manager keeps in mind that there could be results which no one has thought of before. He can then take steps to minimize the damage as much as possible. Of course if the side-effect is positive, a manager can claim the action to be intended and well thought of.

Last year, the sub-prime crisis had hit the US home mortgage sector. Around one year has passed since the term came into fad. A lot of articles have been written, a lot of gyan dispersed on the topic. Even I have had some fun with the sub-prime buzzword. But now it seems the circle has been completed. After Bear Stearns collapsed in March this year, it was the turn of the venerable Lehman Brothers to find a similar fate. However there were no takers for the institutions. BoA has agreed to buy Merill Lynch, so such saviour for LB. The financial crisis which we made a lot of fun of last year has come back to haunt us. Though the financial sector has been the worst hit, there will definitely be a trickle down effect in other functions, IT, marketing etc.

The financial system seemed to be in a dire need of a catharsis and recent events seem to have helped in the cleansing. Now it remains to be seen whether the ruins of the financial sector can be cleared in a few months time or is it time to sit at home wondering what to do with an MBA degree? My optimistic (naive ?) self says that the rubble will clear. So it is time to be prepared. It is time to fire up all cylinders, even if there seems to be no road ahead.