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CoolChip Technology Benefits from ZENeSYS Competitive Landscape Analysis Methodology

September 23, 2011 Leave a comment

On August 20th and 21st, 32 future management consultants from top Business Schools in India participated in a ZENeSYS Boot Camp. The objective of the  boot camp was to learn ZENeSYS Competitive Landscape Methodology and write the best analysis for CoolChip Technologies.

Winner of MIT clean energy award and recipient of a DARPA grant, CoolChip Technologies has perfected its patented technology for rapid heat removal from high performance computer chips. They are now ready for its next level of growth.

The participants in the Boot Camp were tasked with using the ZENeSYS Competitive Landscape Analysis (CLA) methodology to provide an unbiased assessment of CoolChip’s product features as compared to its competitors. Three teams from Boot Camp submitted their analysis in the final round which prompted the following response from William Sanchez CEO of CoolChip Technologies.

“We had the opportunity to benefit from their novel methodology for competitive landscaping. The ZENeSYS analysis will be very useful for CoolChip’s next stage of growth as we seek our next round of financing. In-depth understanding of the competitive landscape is curial for positioning our company. The ZENeSYS systematic framework provides a clear, concise mulch-dimensional presentation of the competitive landscape. The tool is a priceless piece of machinery for processing unwieldy amounts of information. The rapid report generation and high standard of quality make the market intelligence very valuable and a resource CoolChip will continue to use as we explore new market verticals and require comprehensive analysis on incumbents and new entrants.”

About ZENeSYS Competitive Landscape Analysis (CLA): A methodology that has been perfected over two years to get the most up-to-date snapshot of market conditions as it relates to a client’s specific product or service. The methodology uses a framework based on competitor goals and customer’s preferences to synthesize news, blogs, forums, white papers, patents, press releases, testimonials, product literature, industry reports, books, and journals to identify best practices and opportunity areas. Startups develop insights for growth and investors get an unbiased assessment of investment risk.

A Creative Market Entry Strategy for CoolChip Technologies

August 15, 2011 Leave a comment

In a first of its series, ZENeSYS is launching a management consulting training boot camp and a competition to go along with it. CoolChip Technologies, the MIT startup and winner of MIT Clean Energy award is the client sponsor.

The training is directed at young aspiring management consulting professionals in India who are already at business schools or are looking to make the transition. In a week long run up to the first day at the boot camp, participants will learn consulting tools and methodologies available to them online at our website.

On day one of the boot camp, the participants will hit the ground running with a reference market entry case and guidance from instructors at ZENeSYS. On day two, they will develop a market strategy for CoolChip Technologies using our Competitive Landscape Analysis methodology, a powerful and proven technique for quick analysis of opportunities and threats for new products.

The CEO of CoolChip Technologies, Mr. William Sanchez will be present in the Boot Camp to interact with the six teams over Skype Video to answer questions and judge the winning team. The boot camp will be held in New Delhi on August 20th and 21st. Participants from leading Business Schools such as Delhi University, FMS, IIT-DMS, SJMSOM and IIM-R are registered to participate.

“I am truly exited about this boot camp and am looking forward to the creative ideas that will emerge from the entries” said William Sanchez last week at MIT when I met him.

If your firm has an interesting product or service for the emerging markets and would like to be considered for the next Boot Camp, please send me an email at ssen@zenesysconsulting.com.

10 reasons why Consulting Remains the Top Choice for MBAs

August 1, 2011 Leave a comment

Although finance remains the number one recruiter at around 30% for placements at top business schools, consulting is not far behind at a consistent 20% on average. If one takes into consideration that there are limited number of vacancies in consulting as compared to finance, this gap could be even narrower.

So what could be the reasons why business school graduates like to enter the management consulting profession?

We offer 10 good reasons:

  1. Hooked on solving cases: The case based teaching gets them hooked. As they enter a business school, b-schoolers will find a different method of learning and working. The case based learning provokes thinking, gets them into researching facts, analyzing their findings, and synthesizing them into a big picture for deriving creative solutions. They never thought they could come up with solutions like this before and now they are hooked. Management Consultants tackle their engagements just like a business school case. So it’s quite understandable that if they are enjoying their casework at business school, they want more of it.
  2. The creative and the non-conformists: Chances are that this is what drew them into a business school to start with. They got tired of doing the same thing and listening to their boss for every day tasks. They want to do things their own way and not follow directions or bury themselves in a process. The consulting profession is the only profession that calls for maximum room for creativity. There is no micro-management by the boss other than the “dreaded deadline”. They are given the brief on their assignment and then off they go.
  3. It is a gateway to interesting work: Management consultants get exposed to interesting work right away. Examples include Mergers & Acquisitions, Investment Banking, Venture Capital, Private Equity, Corporate Strategy, Transformation and Research. Understandably, this will be only true for those entering the top tier management-consulting firms but candidates can still aspire to build their credibility in sideline projects in smaller or lesser known consulting firms.
  4. Provides exposure to sunrise sectors: By definition management consulting projects gravitate towards sectors that are experiencing a paradigm shift. Currently this is happening in Energy, Health and Information Technology. With the interest in environmental issues, energy crisis and alternative energy interest, consultants are in high demand to provide research, direction and transformational advice. The health sector is experiencing cost and regulatory pressure which is inviting thought leadership from the consulting industry on making necessary business process changes, effective use of technology and call for application in emerging science such as biotechnology.
  5. Consultants play in many sandboxes: Most likely an MBA graduate would not want to get pigeonholed into one company’s vision, technology and ways of doing business. They would want to play in many different sandboxes, right? Well that is what consultants get to do. Each project is different because each situation is different in the consulting world. They will get into different cultures, different technologies, different markets, different infrastructure and even different size budgets each time. This makes it challenging, interesting and a valuable learning experience for them.
  6. Puts an MBA in the “board room”: If not literally, as management consultants, candidates are presented with finding solutions to the toughest issues a company is facing today. This means that their work will have visibility all the way to the CXO level – something not possible in any other profession – at least, not when they are starting out their careers.
  7. Preparation for going their own way: Consulting profession prepares candidates well for going into business for themselves or entering a startup. This is because only in management consulting one can quickly develop skills for tough decisions, tight deadlines, getting the numbers to work, selling, purchasing, motivating, politics, influencing, handling conflicts and communicating effectively. Learning all these skills is possible in other jobs but will take twice as long.
  8. A stepping-stone before deciding on a long-term path: When starting out, young professionals may not be sure of their final calling. For example, do they want to be in a leadership role and rise up to become a CEO? Do they like marketing or sales? Do they prefer to stay in engineering, technology or R&D? Do they like operations role such as customer service, purchasing, accounting, or HR? If they are not sure then they can enter management consulting and experience all fronts and decide later where they want to go. Whichever line they pick, they will surely have ample experience and confidence to fast track to the top when they make up their minds.
  9. Builds their personal network: Consulting is a profession that is guaranteed to make ones LinkedIn connections reach the 500+ mark faster than any other career. Moreover, it will give them a far richer and diverse set of connections as opposed to any other profession. As we all know in these days of social media, career progression is very much tied to the relationships one will build.
  10. The need to get a faster return on investment: Last but not the least, consulting happens to be a well-paid profession so chances of repaying that expensive business school loan are quicker compared to other jobs. No one objects to a ROI that is sooner rather than later.

On an ending note, it would be improper to portray management consulting as a flawless career choice. Consulting is an intense profession with long hours and frequent travel. More than 50% who enter will exit this profession within three to four years. On the brighter side, no ex-consulting professional will deny that it was an exhilarating experience and that it helped them tremendously in the formative days of their career.

ZENeSYS provides live case based certification training program to business school students and other aspirants in Management Consulting. See our training website for more details.

The Great Liquidity Crunch – Private Equity Firms Re-invent Themselves

July 31, 2011 Leave a comment

By Vaibhav Gupta – ZENeSYS Certified Consultant, IIM Indore (2010-12 Batch). Vaibhav completed his B.Tech. in Mechanical Engineering from Delhi College of Engineering. Before his MBA, Vaibhav worked in Project Management for 4 years with Siemens Energy. Vaibhav intends to join the Management Consulting industry after his MBA.

Abstract: The liquidity crunch, tighter regulations and more control demanded by general partners is forcing the PE industry to re-invent itself.

The three key areas of transformation are:

  1.   More secondary deals – establishing the best valuations and finding the right buyers
  2.   Restructuring deals – creative ways of re-negotiating (past) unrealistic deals
  3.   Employing turnaround specialists – creating consultancy like capability for operational improvements

Over the last decade, uncharacteristic of what one might think, the private equity industry has gone through an economic cycle just like the stock market does – up and down. The up phase of the PE market started around 2003 and it continued to boom till 2007-2008 or just when the financial crisis kicked in.

During the up phase, which started after the telecom burst in 2002, the PE industry saw the largest leveraged buyout (LBOs) taking place in history. In the year 2006, PE firms had bought more than 650 US companies for a figure of $375 Million, which was around 18 times the transactions, closed in 2003 [ref 1] alone.

The LBO movement was fueled by decreasing interest rates, low lending standards and tight regulatory framework of owning a public enterprise (Sarbanes Oxley Act) [ref 2]. Consequently, it is one of the reasons why venture capitalists started relying on sales to strategic buyers for an exit.

The arrival of financial crisis in 2008 and the liquidity crunch brought about a quick halt to the LBO frenzy. The leveraged finance market almost stood still during and after the financial crisis. Not only that but as a result of this crisis, many deals were withdrawn or had to be re-negotiated [ref 3].

PE industry is measured with help of two metrics – fund raising and investment activities. The fund raising refers to the money, investors have committed to PE funds in a year. That fund raising activity had fallen to $150 Billion globally in 2009 from $450 Billion in 2008. Coincidentally, the 2009 figure is the lowest since 2004. The lack of debt in the following year of 2010 meant no hope of any speedy recovery.

The other metric, investment activity, which represents the financing of businesses, had fallen from $181 Billion globally in 2008 to just over $90 Billion in 2009. It 2010, it picked up to $110 Billion [ref 5]. This minor jump could possibly be attributed to increased investments in Small & Medium Enterprises and emerging markets such as Brazil, China and India.

Since PE funds acquire firms so that they could be sold at a profit later, life becomes difficult for them during an economic slowdown. Especially more so, where there is a liquidity crunch factor in addition. This was apparent from the total value of PE exit transactions. They fell from $151 Billion in 2008 to $81 Billion in 2009.

From here on to the next five years till 2016, over $800 Billion in loans extended on committed deals would become due or will have to be refinanced [ref 6]. This $800B is distributed almost equally between bank loans and high-yield bonds. To add further complication in hiving off these assets the US government has passed a bill that would require any PE firm which has more $150 Million in assets under management to register with SEC.

The implications are public disclosure of risks, business activities names of the personnel involved, assets owned, amount owed to each creditor, performance metrics, debt and defaults [ref 7].

According to estimates [ref 9], there is one trillion dollars worth of dry powder in PE funds globally. However, LPs are now demanding more control and requesting more information about their investments. The LPs want to keep track of the draw-down capital so that GPs don’t overdraw their limits [ref 8]. This in effect has created a liquidity crunch of sorts, within the PE community itself.

This puts PE funds in a tight spot. How should they service their existing debts and acquire new assets? The solution for servicing debts is to look for different options such as secondary markets, restructuring the deal or employ turn-around specialists to improve valuations. For acquiring new assets, they must look harder in the marketplace or find greener pastures in emerging markets.

Hence, turn-around specialists are in demand nowadays. PE firms are turning away from traditional leveraged deals and looking into investing in distressed companies. They feel it is better to restructure deals based on a change in strategy rather than to take money out and pursue matter in courts.

Turn-around is becoming more and more important as top lines (revenues) are shrinking. Even vendors have stopped extending favorable credit terms. Hence the success of any PE acquisition is down to operational excellence. This means improved management, optimizing expenditures, and rooting out inefficiencies such as overcapacity created in high growth years.

Interestingly, PE firms have identified a new gap in the market – companies, which do not have the means to hire expensive management consultants, are now finding this as a welcome opportunity to bring aboard high quality leadership.

Emerging markets such as Brazil, China and India are still attractive and PE firms need to find ways of entering them. China and India are the two fastest growing economies even during the recession and they need to develop infrastructure to support the high growth. Brazil is set to hold 2014 World Cup and 2016 Olympics.

With increasing pressure from the regulators, lack of liquidity, and tighter control demanded by general partners, future PE deals would need to be financed and executed with better insights and strategic planning. This means deeper research before deals are struck, awareness of best practices in target markets for operational excellence and market intelligence for finding the right buyers quickly and at the best price.

This article has been written as a part of a research project undertaken by one of our certified consultants. All information and content has been derived from secondary research and insights gained from recent projects at ZENeSYS for the PE industry. Credits have been provided in the references for text and data. ZENeSYS provides Market Research and Market Intelligence services to Private Equity Industry on a regular basis.

References:

  1. http://www.washingtonpost.com/wp-dyn/content/article/2007/03/14/AR2007031402177.html
  2. http://www.nytimes.com/2006/12/01/business/01regs.html
  3. http://www.economist.com/finance/displaystory.cfm?story_id=9566005
  4. http://www.thecityuk.com/media/179004/private%20equity%202010.pdf
  5. Wharton PE Report 2010
  6. http://www.freshfields.com/industries/reports/new_normal/assets/new_normal.pdf
  7. A Closer look at “Dodd-Frank Wall Street Reform and Consumer Protection act – Impact on Advisers to PE Funds” – a report by PwC May 2011
  8. http://blogs.wsj.com/privateequity/2011/06/10/limited-partners-talk-about-tightening-the-screws/
  9. http://www.cfo.com/article.cfm/12958163/c_12931795?f=TodayInFinance_Inside

Learning and competing

As a fun way of learning consulting skills, we launched a “Prove your analytical skills” competition in end of March this year.

There were a series of six contests – each tied to one of our six management consulting training modules.

The six challenges:

  1. What is the difference between IT Consulting & Management Consulting? – Contestants were tested on their ability to observe and list the differences in a structured format.
  2. Consulting Knowledge Base – use or abuse? – For this we asked contestants to analyze the underlying ethical issues on the following FT article McKinsey model springs a leak
  3. Issue analysis using Initial Hypothesis – We told them that they are management consultants for Divestiture of Hero Group from Honda and they need to come up with a strategy using this tool.
  4. Creating Hybrid Frameworks – We asked our contestants to create a framework for how Apollo Group of Hospitals may enter Africa.
  5. Creating Recommendations using a Synthesis Matrix – We gave them an analytical snapshot of research data for launching a cosmetic product done in one of our earlier projects. Contestants were asked to develop a set of recommendations on the basis of facts.
  6. Write a SHORT Consulting Proposal – They were asked to write a mock proposal for University of California purchasing system. Their ability to use planning tools to write a proposal that was convincing for the client and addressed the threats from competition was tested.

We wish to thank all who participated and congratulations once again Luis Villegas for first place and Deepak Verma as runners up!

If you are a B-School student or a professional looking to learn consulting skills, join our network @ http://www.zenesys.org

Categories: B-Schools, Learning

Summary of Harvard India Conference 2011

March 28, 2011 Leave a comment

If you are an “India Watcher” then my comments and observations might be useful. Of course this is just one man’s perspective and blogs are not worth a byte if one is not opinionated. Please take it for what its worth on my impressions of this wonderfully packaged and executed event by HBS and Kennedy School students.

  1. Political Situation – Not much has changed. The speakers often used words like “the corruption levels are scary”. On a positive note, solid growth and the efficiency of service industry suggests that one should just “live with this fact”
  2. Where is the Growth? – Health Care and Financial Services sector will see healthy growth. By the way, services sector is where the action is. Manufacturing is going to be a challenge because of (still) poor infrastructure development.
  3. The Energy Situation – 24% electricity is stolen! Capacity is growing at 6% p.a. In other words, the notion that there is shortage is over hyped. Interesting conflict of view between investors and industry pundits on the subject of renewable energy. Government and small scale sector (PPP) sees a great future in solar (not wind) but the investors seem to think that coal and nuclear can deliver energy needs much cheaper, despite all other factors.
  4. Investment in India – Private Equity and Hedge funds are very active in India. There are between 200 and 300 PE/Hedge funds operating in India already! Buyouts are not the best strategy is what I heard but I am personally not convinced. Most funds are finding their way into publicly traded equity. Majority of the LPs are from out of India – so confidence is still high.
  5. Talent Supply – Education and vocational training is badly needed – whether it is a good business opportunity is questionable as it may not be a viable commercially. That would explain why not many are rushing in. Exception is primary education. The discussion on Management Education in India was dull and non-thought provoking – perhaps because the panel did not include anyone from the industry. Several (other) panelists agreed that there is a huge gap in academia and the industry still.
  6. Perceptions of India – A 300 million strong economically emerging middle class is high on the list for global consumer giants but for average person, India continues evoke the image of an “outsourcing destination”. Dan Tanebaum who now lives and works in India gives the following advice to westerners who want to work in India. “Get on a plane and go”. Its simply not possible to get jobs from here. Folks who do not even reply to your emails are just as likely to hire you if you “simply drop in”.

Guaranteed growth, an ineffective but stable government, a rock solid democracy and a “billion entrepreneurs*” – where else would you invest?

* “March of a Billion Entrepreneurs was the conference theme”

Harvard India Conference this weekend!

March 25, 2011 Leave a comment

In these lean times we are all making hard decisions where to spend our money and time. There is an abundance of networking events and conferences and its hard to make a judgment. To do my share of “honest” review I can say that judging by last years event, this one is worth going to.

Attendance make sense of course if India happens to be somehow relevant to your business success. In other words anyone who is an investor or doing business with India, a person of Indian origin or simply someone who likes to follow India.

Last year’s event was well planned and the individual break out sessions were charged with emotional discussions. There was never a dull moment. Judging by the agenda and the line up of speakers and  panelists, I am pretty sure we are going to get a repeat performance. The lunch box from Taj Boston should be definitely be an improvement, if there is at all an area of improvement I could have suggested. I am keeping my fingers crossed for a Chiken Tikka Sandwich!

I know this is a last minute thing here and weekends are precious for most of us to compromise. This one is well worth it if you can manage to go. The conference starts tomorrow at 2.30pm and is scheduled to continue all day on Sunday. Here is a link to the website.

They have even setup google moderator to collate attendee questions in advance. Its even better than eVite – we will know what guests will be talking about!