10 business lessons for start up founders from Cricket

Recently in our company blog, we published an article titled Top 10 Leadership & Life Lessons from Tokyo Olympics 2020. While it touched upon my learnings from the game of cricket briefly, this post is essentially a long-form version of it.

Cricket is one sport that I have enjoyed watching and playing growing up. The game has undergone many changes in the past few decades, some good and some bad. While it has 42 written Laws and a 1000 nuances, at its core, it is simply about putting bat to ball. These are some of the lessons I picked up from this game which has helped me in both life and business.

Patience – It isn’t over until the last ball is bowled

Cricket is a sport that requires a lot of patience. The longest format of the game is played over 5 days. It teaches you the value of patience and staying in the game till the last ball. Playing and watching the game over so many years has taught me to be patient and play the long game in life.

Momentum

Momentum is significant in sports. You will not be able to see it in the score sheet at the end of the day, but momentum can swing a game in your favour or against you very quickly. In life, too, you can use momentum to your advantage to seize the day. Something as simple as getting the small items checked off your To-Do list at the start of the day can give you a lot of momentum to take on the more daunting tasks.

Knowing your blind spots

In Cricket, a good batsman is always aware of where his off stump is. It allows him to leave deliveries that he shouldn’t be poking at. A parallel to this in life is knowing your risk appetite when it comes to decisions regarding your finances or career.

Respect the conditions

First day, first session on the swinging pitches of England, you don’t go out thinking about smashing every ball to the boundary. You wait it out. You leave balls in the 4th stump line and bide your time till the ball gets old. Once you have survived the morning session, then you start scoring. Tired bowlers and an old ball will give you plenty of opportunities to score runs. In business, market conditions can throw you off your growth trajectory. It doesn’t help if you stay stubborn and try to outspend and buy growth during these times. You have to respect the conditions, cut costs and wait it out sometimes for the condition to improve. Survival is key.

Mindset is everything

Test matches are played session by session. Each session gives you a chance to start fresh. If you lose a session and carry over the impact to the next, you are sure to lose that session as well. Getting into the right mindset – a positive frame of mind at the start of each session is important to get back in the game. In business, you might have a tough few days or months or a quarter. However, if you let that affect the company’s overall morale, you will soon descend into a tailspin. The key for you as a leader is to get your team in the right mindset no matter how horrible things have gone previously.

Nothing beats match practice

Whenever a team tours a country, they play practice matches with the local teams as part of their preparation. One such match played is worth watching 1000 hours of footage of opposition bowling and strategising through the night. Nothing beats match practice. Similarly, you can read all the books and theorise as much as you want in life, but actually rolling up your sleeves and doing the work will give you a better perspective.

Challenge status quo

Cricket has a Decision Review System where if you feel that the umpire is wrong, you can challenge their decision. If you are right, the umpire’s decision gets overturned. Just because a decision comes from a figure of authority doesn’t mean that it can’t be challenged. In fact, encouraging a culture of dissent and questioning in your teams can help you build a stronger team.

Horses for courses

Cricket has 3 established formats. The 5-day game or the Test, the 50 over game or the One Day International and the 20 over game or the T20. All these formats demand a certain set of skills from the players. There are very few players in international cricket who play across all three formats. Many teams even have different captains across formats. A horses for courses policy is at play here. When we build teams, we tend to hire people who think along similar lines. While this ensures that there are hardly any conflicts within the team, this might not be the best way to build a team that delivers results. You need to onboard people who bring something different to the table and add to the team’s strengths rather than filling it with people who all think and act the same way.

Fortune favours the brave

Outside edges that fly over the slip cordon are a common sight during the slog overs. This happens when a batter goes hard at a ball with full conviction but fails to middle it. Half measures and indecision can cause more pain in life and business than being wrong. Sometimes it is essential to make a decision and throw the kitchen sink at it rather than doubting yourself.

After all, it is just a game.

When you are out on the field, you play hard. You give your everything, but once the last ball is bowled, you must move on from the game and not carry the baggage with you.  When all is said and done, it is just a game.

If you enjoyed reading this article, here is a similar article on my learnings

Tenets of professionalism

Over the last 12 years, I have worked with hundreds of people. Here are some of the top traits I have seen in people that are true professionals.

Tenets of professionalism

  1. Professionals take ownership of their work. Whether they are serving their notice period in an organisation or just starting out they take complete ownership of their work.
  2. Professionals have a clear definition of ‘Done’. Even in multi-team tasks, they don’t sit back once their part is done. They ensure that teams down the line don’t drop the ball
  3. Professionals believe in how you do anything is how you do everything. Not everything you do at work will be seen by others. However, a true professional does everything with the same diligence no matter how big or small the task.
  4. Professionals have a razor-sharp focus on attention to detail. Lack of time, bandwidth etc are never reasons for a professional to do shoddy work. They check and recheck everything they work on for the smallest of errors. As a result their work never requires someone else to do a QC before release.
  5. Professionals don’t leave a mess behind. Like a Masterchef who doesn’t leave behind a dirty kitchen or a developer who writes readable, well-commented code, a true professional always delivers tip-top work without leaving a mess behind.
  6. Professionals are punctual. They set reasonable deadlines and always stick to them. They don’t forget appointments or give last-minute excuses.
  7. Professionals are consistent. Professionalism is not an option. It is not a choice where you can pick the dates or tasks to be a professional at.
  8. Professionals don’t whine and crib. They are solution seekers. They solve problems and don’t complain about what is wrong with the rest of the world.
  9. Professionals take initiative. They don’t wait for others to roll out the red carpet. Above all, they fix issues they come across even if it is outside their circle of concern.
  10. Professionals love what they do and Inspire others with their work.
  11. Professionals are technically sound and know the nuts and bolts of their discipline. They are always working on their craft and becoming better each day.
  12. Professionals are transparent in their dealings. They never hide information, mislead or use information asymmetry as a source of power.
  13. Professionals are respectful and humble irrespective of whether they are dealing with people above or below them in the reporting structure.

If you are interested in similar articles, here is one I wrote a while back on ‘Learning from my life’

The resilience of Costco Notes

Recently came across a deck on the Resilience of Costco, I have tried summarising my learnings on the same below

Gross Margin vs Membership Fees – How Costco Makes Money

Financial data Costco

Costco is the second-largest retailer in the world by sales volume – 149B USD.

Costco doesn’t make much money on the 149B product sales. Their gross margins are in the 11% range. Instead, it makes money out of the 60$/yr membership which totals to around 3.3B that goes directly to the bottom line. Costco has 50M members and 27% of US household are cardholders. 75% of the bottom line or Net Income is from membership sales. The renewal rate of membership is around 87%.

Paid Membership Growth of Costco

The Costco Flywheel

It is this membership fees that allows Costco to lower the cost of the products it sells thus initiating a flywheel. Lower Costs > More Memberships > More Sales > More Leverage on Suppliers > Lower Costs

"For every dollar we save, we give 0.90$ to the customer" 

Key aspects of Costco Operations

  • Limited selection – 4,000 SKU vs 120k of Walmart and 600M of Amz. Most products have just one choice
    • This means they are the largest customer of their suppliers and hence enjoy better prices
    • Efficient employees as there is less reordering, figuring out suppliers, tracking orders from suppliers etc – leads to the highest rev/emp and profit/emp
    • Surprisingly lesser choices mean less cognitive load for customers and thus keeps them happy and confident in their selection
  • High quality
    • By selling only high-quality items you can eliminate the need to advertise
    • You can also reduce the returns
  • Bulk Sizes
    • Bulk sizes end up making customers spend more
    • It makes it difficult to steal stuff. Costco has a 0.2% of rev theft rate annually
  • Custom Packaging – display-ready pallets shipped directly from the supplier
    • Saves cost
    • Saves employee time spent sorting and organising stuff
  • Warehouses
    • No backrooms. Every square inch of space is used to sell and earn revenue
  • Labour
    • Wages of 22$/hr compared to 15/hr for Amz and 14/hr for Wmt
    • Annual employee turn over rate of 5% compared to 59% for the industry thus saving on hiring, training and replacement costs
    • Good employees with longer tenures provide better customer service
  • Inventory turn over time in Costco is around 26 days. If you consider Net60 payment term for vendors, then essentially the vendors finance the whole operations

https://www.dropbox.com/s/vfp35g2kq5yx78c/COSTCO%20Deck.pdf?dl=0

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