The Phantom Paradox & Why I'm The Biggest Genius In The World Yet The Poorest Person I Know - Aditya Yadav

1. “Running an Agile Fortune 500 Company”
Aditya Yadav, aditya.yadav@gmail.com
http://www.adityayadav.com
*

2. *
*A Typical Global Company
*Fortune 500/1000
*200 Divisions
*40 Countries
*25000 Employees

3. @ Acme Inc.
*

4. *
*Original Question “We are in
Telecom/Consulting/Product Business and we
need to Focus on Value Added Services and not
The Core Services. What are your thoughts???”
*The Correct Question - “Whoa! Hold On… give
me just 5 minutes to explain and then I will
leave you to decide… Allow me!!!”

5. And The Philosophy Behind The Answer
*

6. *
*A very dear friend of mine is a Hot Shot CXO in a
Top Telecom firm, other than him I have advised 4
other Telecom CXO’s in my entire career and they
all wanted to Focus Exclusively on Value Added
Services…
*Honestly I’m probably a genius… but when I look
back at my career… I realise I’m still the Poorest
amongst everyone I know
*Is there a connection between the above 2
seemingly unrelated things?
*Lets explore further!!!

7. *
* A McKinsey partner once said – Nobody makes money in consulting by giving The Best Solution but
rather all successful consulting companies make money by Cross Selling and Up Selling their entire
Consulting Portfolio.
* Hmmmm!
* Now in my career I have seldom delivered a sub-optimal solution and I deliver results really really
fast… in the order of hours… or days
* E.g. While I spend about 5-10 hours listening to the problems and collecting information/data I
deliver the solution in the next 2-3 hours…
* So compared to a Hot Shot Consultant who spends 6 months on the Engagement and sells atleast 5-
6 other Consulting Services and makes $5+ million/engagement I just make equivalent to 13-14
hours of my going billing rate. Which on the bright side is just enough to put Bread on my table.
* And now we all know why I’m the Poorest Consultant on the Planet 
* Telecom companies have a similar situation, Profits from their Core Services are so so low that all
of them want to Just Focus on The Value Added Services where the cost is low, profits are huge
huge and also incremental cost of offering is next to Zero.
* But between the 3 scenarios I mentioned above there is a common underlying paradox and I spent
a whole lot of time and effort to try and create a framework for analysing exactly just that.
* I call the framework The Phantom Paradox Framework!!!
* Lets see what that is in the next few slides.

8. *
Experience
Services
Core Product
Experience Revenue/Profits/Value
Services
Revenue/Profits/Value
Core Product
Revenue/Profits/Value
Offerings Value

9. *
*Refer to the previous Slide #8
*At the left we have Offerings in a Bottom Heavy
Pyramid with Foundational offerings At The Bottom
[Ignore exactly what those offerings are mentioned
in the diagram, it differs from Firm to Firm but the
idea is what’s important], and on the right we have
Value/Revenue/Profits in a Top Heavy Pyramid
*Note: we have already discussed that Value is ONLY
AND ONLY REALISED IN THE CUSTOMERS VALUE NET
*So what’s the Paradox?
*Now Refer to Slide #7 again and think about Slide#8
and how it applies to it.

10. *
* Allow me to explain…
* You build your business around your core offering
* But due to Extreme Competition the profits you derive from that is negligible
* So you move to Higher Order Offerings building on top of your Core Offerings
* It just happens that the most Profits in your business lie in those Higher Order Offerings and more or
less in the Reverse Order of the Core-ness of your offerings.
* Now the biggest problems is that Executives Naively infer that they will exclusively Focus on the Higher
Order Offerings because that’s where the money is.
* But the offerings are in a Pyramid (on the left) and you Need to have a strong base to build your
business offerings on top of the one’s below
* The Paradox is that if you just focus on the core… there is No Money there and you will go out of
business
* Also if you ignore the Core and focus on the Higher Order offerings …TEMPORALLY money will start
flowing in but it will start dwindling and crashing, so any executive will instead of fixing the Core will
BRUTE FORCE it and while the Higher Order Offering Revenues are falling, the Executive will TURBO
BOOST it… and two things will happen
* Revenues/Profits will start going up again temporally and will absolutely absolutely crash very
soon in the near future because You Cannot Turbo Boost Infinitely
* And also the Law of Diminishing Returns Kicks in really really fast.
* Allow me to offer you a mathematical framework to analyse this… somewhat quantitatively

11. *
* Let’s number the Pyramid with 0 at the bottom and increase ‘i’ by 1 as we
go up one level
* So Quantum/Quality/Strength of Offering O at any level is Oi on a scale of
0-1
* And the Value/Revenue/Profits V at any level is Vi in US $’s
* Now the heart of the framework is that Business Success is = (O0 x V0 + O0
x O1 x V1 + O0 x O1 x O2 x V2 …) depending on the height of your pyramid
* The model is essentially saying if 0th order Strength is 0.8 on a scale of 0-1
and 1st order Strength is 0.6 on a scale of 0-1 then to calculate the 1st
order Success you don’t just use 0.6 because 0.6 builds on Top Of 0.8 and
mathematically is Success within 0.8 as if 0.8 was its top of the scale i.e.
1 (from scale of 0-1) so we multiply 0.8x0.6 and multiply it by V1
* What we are saying is that while its true there is no money in core
offerings but without a strong core foundation you will not be able to
‘Sustain’ extracting Value from higher level offerings

12. *
* So what happens in a Competitive Scenario?
* Lets extend the model
* If Oj and Vj be the parameters for your Next/Nearest Competitor
* Lets ΔO be = Oi - Oj if former is greater than the latter, and = 0 if former is
less than the latter (Basically we are calculating how much ‘our’ offering
is better than our competitors and using 0 if it is not)
* Similarly for ΔV
* So Business Success in a Competitive Scenario is = ΔO0 x ΔV0 + ΔO0 x ΔO1 x
ΔV1 + ΔO0 x ΔO1 x ΔO2 x ΔV2 …
* And that is the framework behind analysing The Phantom Paradox!!!
* MTV Enjoy!!!
* *** Note: There is a singularity in the model but it is almost never ever
encountered in Practice!

13. *
Aditya!!!