Saturated Launch versus Silent Launch: Quality and Innovation as the Tilts to the Right Choice

Product launch is one of the most important milestones in the lifecycle of a product. Next to product development expenditure, product launch expenditure is the single largest expenditure component. While the scale and scope of launch determines the scale of revenues, the splurge on product launch also has an adverse price impact, influencing revenues in turn. Several options are available to the new age marketers in media to achieve saturation marketing. The loudness of some of the recent product launches including multi-full page advertisements raises the question if the maximal deployment of the promotional resources is required in today’s competitive marketing scenario or, on the contrary, promotional resources are being well spent. In fact, some of the promotional characteristics of even high technology products like consumer electronic products are focused more on visual aspects than on technical points. Even in respect of iPhone there is nothing more than a strong product visual and a price buyback offer in a full page advertisement!

While this excessiveness is an offshoot of free market competitiveness, the trend of saturation and intense advertisement of product launches is also related to the shortening product lifecycles. It has probably become important for firms to aim at the fastest possible recovery of investments, sometimes in periods as short as 3 to 6 months. The movie launches of recent times which aim at not only maximum number of screens in the home state or home country but also at simultaneous multilingual and multi-country launches is a striking example of saturation launches. While the automobile industry in sellers market conditions was accustomed to pre-launch booking of cars, other businesses especially cell phone and tablet firms are vying with each other in taking pre-orders although such industries are not exactly in sellers market conditions. Saturation marketing for the benefits listed above carries with it the possibility of making the customers insensitive to the messaging. It is time to consider if silent marketing could be an alternative to the current trend of vocal marketing; however, prior to that, an examination of what could constitute saturation launch could be appropriate.

Saturation launch

Saturation launch involves launching a new product through a well conceived and well coordinated advertisement campaign on the new product involving all the media (almost like a  blitzkrieg!). Typically, it starts with teaser advertisements in the pre-launch phase and full blown advertisements in print (newspaper and journal), radio, television, cinema, and social media immediately prior to and after product launch. In respect of certain products (such as automobiles and electronic gadgets) exposure in exhibitions of products at prototype stage itself is a given phenomenon. The benefit of saturation launch is that it captures the attention and imagination of the widest possible potential buyer and influencer base. It caters for diverse attention spans and mood scenarios, from early morning to late night exposure and flexibility of weekdays or weekend coverage. Given that each medium has its dedicated following as well as transient and random following, an exposure strategy can be designed based on product features and target customers. Saturation marketing is expressive in multiple ways; in fact, it attempts to capture the imagination of the customers through multiple human senses.

Pictorial, reading, listening, touching and simulation are the ways in which saturation marketing works. Saturation marketing can attract a potential customer to a product through pictures, can educate through written explanation, convince through sound bites, motivate through feel, and integrate through experiential simulation. Movie trailers, product displays, model homes, architectural walkthroughs, self-selection options and automobile test drives are examples of how pilot experience options can be deployed by firms to propagate the features of products as launch cum marketing experience. Next to such holistic experience, pictorial launch and marketing has been the most effective, and popular, medium of launch communication in India, even in this digital age. Sky hoardings, wall posters and wall paintings, rain and sun canopies and painted displays on transport equipment continue to be the most expressive launch media in India. Packaging and carry bags as well as flyers and leave behinds or product leaflets enable communication of the messages in a more ambulatory fashion. It is estimated that a saturation launch campaign on all of these lines together with maintenance marketing would cost anywhere between 10 to 20 percent of sales revenue for a product that achieves a viable scale.

Silent launch

Silent launch, on the other hand, could save the firm a considerable amount of such expenditure which can be passed on to the customers in terms of lower prices for the products. However, what exactly could be a silent launch has no formal definition. That said, it may be defined as a launch of a product without advertisement or publicity of the contemporary kind. One of the recent silent launches in India has been the re-launch of Tata Aria crossover SUV a few weeks ago. Compared to the first launch a few years ago, the re-launch has been absolutely quiet. In practical terms, silent launch tends to be the only option for products launched by small and micro enterprises (SMEs) and self help groups (SHGs) which cannot afford launch resources. That said, a silent launch need not be, and cannot be, a nondescript launch. Silent launch could involve quiet but effective product display at points of sale with efficient sales executives explaining the product features, and wherever feasible, touch and feel. Display of new automobiles in luxurious shopping malls is an example of silent launch. Even in the FMCG sector, consumers are often surprised by new products which quietly take shelf life alongside established products. Some of the SMES and SHGs tie up innovatively with leading hotels and retail chains to gain display and marketability as a component of the corporate social responsibility of such large enterprises.

Silent launch is particularly appropriate under five conditions. The first is when the product is such a runaway hit that it needs no special publicity. An iPhone, whose attributes of use and symbolism of possession are well known, qualifies for such a silent launch position. The second is when the product is likely to be a low volume niche product whose sales would not bear a proportionately elastic relationship with the advertisement and other launch expenditure. Tata Aria, which though a good product could not capture the imagination of the market, falls in such a category. The third is when a product is launched under marginal costing principles leaving no scope for launch extravaganza. The fourth is when, as discussed earlier, the firm by its very ownership or operational structure has no resources to support launch activities. The fifth is when the product is of a neighborhood variety; for example, local produce or local eatery. Word of mouth, including product reviews by independent reviewers, plays a strong role in the success of silent launches. Silent launches can occur in any industry though! The movie industry is prone to successful silent launches made possible by positive word of mouth. Products which are highly visible in use (like automobiles) or in display (like televisions) and products which are a common part of daily use (like fountain pens) gain by word of mouth or ease of use. Some industries like pharmaceutical industry or insurance industry may find themselves appropriate for (relatively) silent launches given the regulatory restrictions.

Quality, innovation

Saturation marketing, by definition, is cost-intensive. In contemporary marketing in India it has become cost-excessive due to several high voltage attempts to grab attention. The practice of having a celebrity brand ambassador (a successful movie actor or an accomplished sports person, for example) has been the biggest cost driver of saturation marketing, on a rather universal basis. Sponsorship of major sporting events such as Cricket IPL and Football World Cup are the significant seasonal cost drivers.   Taking full front page advertisement space in newspapers and multifold front page advertisement space in journals and magazines has been another extravagant cost driver. Sponsorship advertisements in popular television serials or sporting event telecasts are also major cost drivers.  In terms of sunk costs with recurrent expenditure, exclusive company sales plazas have emerged as the trend to capture consumer imagination. Big firms tend to utilize all of these elements to ensure, in their view, strong enterprise and product line recall. However, does this recall automatically translate into consumer preferences for specific products? The answer is probably in the negative.

If Samsung, LG or Sony would launch a curved super high definition television, the consumers would be interested in evaluating purchase of such a new product based on novelty of features and the prestige value associated with such purchase rather than on whether any of the companies was associated with any great event or celebrity. While it may be argued that when the market is crowded with many competitors such high voltage and saturation marketing enables some differentiation and recall, it is a moot point if there exists a direct correlation between such saturation investments and actual product purchase decisions. Many of the concepts underlying saturation launch and marketing need to be validated by research on the revenue effectiveness vis-à-vis cost extravagance. In the earliest stages of mechanical revolution, in the middle years of electronics revolution and in the contemporary digital age, only quality, as evidenced by predictable and reliable performance, remains as the robust consumer draw while only innovation, as evidenced by premium, futuristic product design, remains as the unique product differentiation. As competition gets tougher, firms would do well to seriously reconsider marketing extravagance and reevaluate relative allocation of expenditures between sustainable quality and innovation on one hand and saturation launch and marketing on the other; from the author’s view the balance has to tilt strongly tilt in favor of the former! In such a quality and innovation driven scenario, silent launch could provide more value for the consumer than saturation launch would provide.

Posted by Dr CB Rao on June 15, 2014

   

  

 

Competency-Ownership Grid: Towards Reinforced Accomplishment

Positive living requires sustained accomplishment. Accomplishment is rarely individualistic; it requires at least two parties, in many cases several. Accomplishment need not necessarily be only material; it could be philosophical or spiritual too. Most, if not all, of material accomplishments are bilateral or multilateral. From a conceptual viewpoint, even multilateral accomplishments can be reduced to bilateral ones; for example, an interactive accomplishment between agencies of government and several firms can be seen as a broad government-industry interaction or accomplishment. Even an apparently individualistic accomplishment of attaining spiritual nirvana is an interactive accomplishment between the mind and soul of an individual. The key question is how any interaction between entities can be translated into mutual accomplishment. The answer to this question determines how people and societies can achieve positive living.

Typically, activities precede achievement even as thoughts or intents precede activities. When firms and governments desire to promote industrial growth, several actions such as formulation of industrial policies, establishment of industries and commencement of commercial operations must take place. When someone desire to achieve nirvana, he or she must have a meditative conversation with his or her soul to achieve a state of tranquil mindfulness. All these myriad forms of activities with others and self can be seen as forms of engagement. How well these activities are accomplished is not a function of intent; rather it is a function of how genuine and effective the engagement is. The robustness of engagement depends on two principal factors; competency in engagement and ownership in engagement. Together, these form a competency-ownership interlock.

Competency

Competency is the ability to do a job well. Competency, in a more focused sense, is the skill needed to do a particular job or meet a particular task well. Competency has a specific need as well as a broader need. Every job brings in its stride certain unexpected occurrences. For example, in spite of measurement of all parameters a raw material may behave in an unexpected fashion while being machined. In spite of understanding human anatomy well, both academically and practically, a surgeon may experience an unexpected internal organ structure. One therefore needs to have specific competency to do a particular job but also a generic competency to build on the specific competencies by adaptation of specific competencies or integration of additional skills. The artisan who builds a superstructure, for example, must be able to address how a construction must be managed in turns and crevices to avoid water seepage. In other words a construction worker must have enough knowledge of waterproofing, and a waterproofing worker enough knowledge of construction.

Competency gets built through a continuous learning process, first through education and next through experience.  Competency building is a behavioral process as much as it is an intellectual process. It is a combination of educating oneself through formal or informal processes. It requires opening up of oneself without ego to what is required for the current state at one level and be prepared for future state at another level. Not respecting the teaching and learning processes in the school and college phase and not respecting the observing and learning processes in the employment phase impede competency building. Competitive learning which dominates the contemporary learning processes takes people ahead on examination or selection criteria but not in terms of true learning. Competency building requires a combination of focus on the core and diversity for the future. Each learning experience gives an opportunity to discover what one is really good at life, and what makes one truly actualized.

The ability to build optimal levels of competency at different stages of life and in the context of various tasks is dependent on an individual maximizing one’s performance through a complex balance of competition and collaboration. Competition is an intrinsic feature of human psychology stemming from recognition that resources are limited and wants are unlimited. Collaboration is a contractual feature of social psychology stemming from a realization that by pooling resources and skills one can be more competitive than others.

Ownership

Ownership means that something belongs to someone. Ownership had been the central thesis and the vortex of myriad debates of economic policy. Private versus State ownership had been at the center of debate over private versus public capitalism. Over the last centuries, practical economics has seen the relative success of private ownership and enterprise over state ownership and enterprise. Major private enterprises, even in advanced countries wedded to free capitalism, have seen failures of private ownership and management while some public enterprises, even in developing economies, have seen successes of state ownership and management. Yet, on a broader and relative plane private ownership has emerged as a better driver of greater success. In this context, it is somewhat enigmatic that the word ownership gets well used but also misused in individual or business performance context.

The urge to own is inherent in human evolution, transiting from total dependence to semi-dependence, independence and interdependence in different shades.  A child who for the first time tries to crawl or walk by himself or herself, or tries to play with articles is unknowingly but spontaneously is, in fact, taking ownership of his or her life. Yet, as the child grows up and as competitive learning and employment processes divide people into different categories, the concept of ownership gets distorted. From ownership based on natural curiosity and quest for independence, people migrate to ownership based on focus and specialization, rules and regulations, and rewards and risks. The trend shifts from doing what one beckons one intrinsically to what one must do, or must appear to do. The context and drivers shift to expectations of others, be it family members, teachers, friends or employers. As a result, individuals may own qualifications but not the intrinsic learning or knowledge, and may own jobs but not the inherent processes or outcomes.

Ownership is both transactional and philosophical. A teacher needs to own his or her subject but more importantly must also own his or her pupils. The teacher must also own in a broader sense the school itself, even though he or she is just one stakeholder. Effective ownership comes from genuine identification with a cause. Real ownership comes with one’s genuine sense of belonging to a cause or with a role rather than from a view that a role belongs to oneself.

Competency-ownership grid

Obviously, if one is competent for a task and has ownership of the task, one would be able to deliver an optimal performance for the benefit of all stakeholders including the performer. However, life being not so simple, we have opposing polarities of incompetence and escapism to competence and ownership respectively. To be objective, both competence and incompetence are relative terms which need to be understood with reference to a task (and a natural or acquired ability to meet the performance requirements of the task) while ownership and escapism are also relative terms which need to be understood with reference to the task (and a natural or conditioned aptitude to stay committed to the task). Competency-ownership matrix therefore needs to be assessed on a case by case basis by individuals as well as organizations. As with a 2X2 matrix, there could be four combinations of Competent Ownership, Incompetent Ownership, Escapist Competence and Escapist Incompetence, all of which tends to be individual and organizational realities.

Competent Ownership drives long term sustainable performance in all bilateral and multilateral relationships. It should be the goal of all team members and leaders to find periodically the right match of abilities and tasks on one hand and instill and continuously encourage a sense of belongingness on the other hand. Competent Ownership does not stay fixed throughout entire career spans and organizational journeys.  Individuals and leaders need to continuously review the effectiveness of competent ownership. Incompetent Ownership is a correctable feature of team dynamics but needs careful solution. Just because an individual is not suited in terms of skills to a domain placing the individual in another domain may not guarantee success unless the individual has a sense of belongingness to the new domain as well. Moving one from Incompetent Ownership to Competent Ownership needs to be a calibrated exercise.

It is relatively easy to evaluate one’s competence but is difficult to assess one’s sense of belongingness. It is not unusual, therefore, to find Escapist Competence in organizations, which is unfortunate. Individuals who do not have a true sense of belongingness and leaders who are unable to assess the pockets of escapist competence leave the individuals and organizations in a state of false complacency. And, of course Escapist Incompetence is an organizational nightmare. Individuals who are neither matched to the tasks in terms of their skills and have no belongingness to the tasks constitute a category that needs to be addressed with urgency and understanding both by individuals and the leaders. Whether a drastic restructuring of talent and tasks helps in minimizing the occurrence of Escapist Incompetence needs to be evaluated prior to drastic actions.

A virtuous grid

Clearly, it would be ideal for all individual, organizational and social endeavors to have only Competent Ownership as the underlying human factor of performance. It is, however, unlikely that in an organizational continuum, it would be a natural occurrence. Even structured processes of self-selection by individuals and multi-layered assessments by others may not result in a virtuous grid where all, or almost all, space is occupied by the Competent Ownership segment. It is, therefore, an individual responsibility as well as a leadership responsibility to constantly retool oneself as the tasks evolve, and recommit to tasks on one hand with a continued sense of belongingness. That said, mismatch of task-competency and task-belongingness equations need not necessarily mean end of the road. Such awareness may simply open up new vistas of opportunity.

The basic thesis is not as much as about the grid, per se but the need to be on a mode of continuous learning and developing a sense of belonging to the tasks on hand. In a dynamic world, knowledge keeps increasing and the tasks keep transforming in scale and scope. When one stops learning, one starts becoming less successful. When one starts losing the sense of belonging, one stops enjoying what one does. The good news is that self-awareness as well as team awareness can help individuals stay in the zone of Competent Ownership. Virtuous organizations excel not only in the much emphasized aspects of strategy and execution but also in the matching of abilities, tasks and ownership at individual, team and organizational levels. In all forms of bilateral and multilateral engagement, individual to individual, individual to entity, entity to entity or government to society, Competent Ownership is the only solution to sustainable and equitable development.

Posted by Dr CB Rao on June 8, 2014 

Indian Aviation Industry: Red or Redux for Strategic Competitive Analysis?

Jet Airways, India’s favorite private airliner, posted its largest quarterly loss (of USD 360 million) recently casting doubts on its ability to turnaround despite the sale of a sizeable equity stake to Etihad. Jet’s difficulties compound the loss making operations of India’s full fare national carrier, Air India on one hand, and the low cost private airliner SpiceJet on the other. Air India (together with Indian Airlines) has been operational from 1932 with 4000 daily flights to over 90 national and international destinations while Jet has been operational from 1993 with 3000 daily flights to nearly 80 destinations and SpiceJet has been operational from 1993 with 350 daily flights to 58 destinations. While there are other marginal players like GoAir and Air Costa, their position is not considered any better. The sad story of Kingfisher Airlines which once had a 20 percent market share and has since ceased operations last year , and is in serious debt repayment woes, continues to trouble investors and bankers. The net loss of the major loss making airliners of India has exceeded USD 1.2 billion in fiscal 2013. Cumulatively, the Indian aviation industry is reported to have lost over USD 8 billion over the last seven years and the industry debt has exceeded USD 13 billion. The only successful airliner in India seems to be IndiGo, a privately held operation (from 2006 with nearly 500 daily flights to 36 destinations). 

Green is red?

In this scenario of airliner industry being in scorching red, AirAsia India, with its striking red livery, has made its entry into the Indian aviation as a low cost airliner (as an Indian subsidiary of the highly successful Malaysian AirAsia). It has made a splash with the announcement of its inaugural flight from Bengaluru to Goa on June 12, 2014 at a tantalizing fare of Rs 999. It is believed that AirAsia would launch its additional flights also with such nano fares. In the Indian aviation industry, approximately, Air India has a market share of 20 percent, Jet at 22 percent, IndiGo at  29 percent and SpiceJet at 19 percent. Together these four airliners garner 90 percent of the Indian aviation market. Given the more or less equal division with three unprofitable and one profitable airliner, new entry is a risky proposition on the face of it. The existing airline players together are up in the arms against the green light to AirAsia; clearly they are apprehensive of the adverse competitive impact of a disruptive entry into the Indian skies.

Mittu Chandilya, the young and aggressive CEO of AirAsia India has said that theirs would be the only true low cost airliner in India while all others may try to gain shares on low fares. He implied in several forums that the existing airliners have their faulty or inefficient operational models rather than low fares to blame. He has also committed himself to enter the market with disruptive pricing but expressed confidence that the airline would breakeven in a few months due to intrinsically superior operating model. In a characteristic response Indigo offered the classic Indian formula of Re 1 fare even as SpiceJet has been on low promotional fares for quite some time. It is unclear, at this rate, as to where the operational and business models of the Indian airliners would lead to, and if the Indian aviation industry would be in a perpetual red zone. There are doubtless some differences, with established airliners like Air India,  Jet, SpiceJet and Indigo being both national and international  (in varying mixes of course) and AirAsia being a pure domestic play. The Indian aviation industry makes an excellent case for analyzing structure, strategy and competitive advantage of firms, in particular the relevance or otherwise of Porter’s theory of competitive strategy in multiple facets and the need for an alternative theory.

Industry analysis

Transportation industry is a consumer facing but highly infrastructure controlled, technology driven and investment intensive industry. The industry has to perforce operate through public (government owned) assets, be it roads, rail tracks, sea ports or airports. The Indian aviation industry reflects these characteristics in a distinctive manner; it is an oligopoly with a mix of public, private and overseas ownership. Airports are tending to get privatized, but not entirely and the skies are regulated. Aircraft makers are just two or three, and investment costs are huge. Aircraft turbine fuel bears huge import costs and duty elements and taxes dominate the fare structure. Air transportation is a highly technology intensive operation with compelling needs of rapid turnaround and uncompromising safety. It requires highly skilled workforce, be it pilots, maintenance engineers, flight crew or ground handlers. In most cases, the service an airliner can offer tends to be accentuated or attenuated by the quality of airports while even the lowest of fare is ballooned by tax components.

In terms of strategic framework, at one level the competitive forces seem stable. With only two aircraft builders with long delivery lead times but fiercely competitive between themselves, the bargaining power of suppliers is high but not prone to escalation. With capacity ahead of seats and occupancy factor being elastic with fare competitiveness the bargaining power of buyers is low but not compelling. With air transport being a favored requirement for business travelers and time-sensitive travels, the threat of substitutes is low but distance distorts the competitive force; the shorter the distance the greater the threat of alternate transport modes such as rail and road. Given the loss-making nature of the industry and the exits and consolidations that happened in the industry from time to time (East West, Sahara, ModiLuft, and Air Deccan) the threat of new entrants ought to be low but entry now and then (example, Kingfisher, GoAir, Air Costa and AirAsia) with disruptive operating models reflects that the threat of new entrants is real and the Indian aviation industry defies the Porter’s norm of industry attractiveness.

Industry rivalry, the fifth competitive force, is judged by the scale and scope of competitive responses of the players. In general fast moving consumer goods, electronic goods and white goods industries are known for high competitive intensity. Road transport in spite of the fragmented competition and rail transport by virtue of being a State monopoly do not engage themselves in intense competition. Air transport in India continuously fluctuates between cartelized high fares and disruptive promotional fares. Apart from boosting occupancy factor and market share, individual airliners do not have any other apparent reason for competitive behavior. Given that market share is gained at the expense of profitability in the Indian aviation industry, industry rivalry is intense. That being the case, the air traveler ought to have been the winner but apparently it is not so; poor connectivity, minimal options, high dynamic fares, long waits and bland service are the common refrains of domestic frequent fliers. International flights may offer better service but options tend to be few and expensive. Considering the five competitive forces, the Indian aviation industry refuses to be described adequately by the theory of competitive strategy.       

Need for a new model

The state of the Indian aviation industry, as discussed above, is reflective of an industry that has few degrees of freedom to control its destinies even though individual firms aspire to succeed. The industry’s logjam which cannot be removed by the entry of one or two overseas airliners as wholly owned subsidiaries or joint venture partners. The industry needs to work on a multilateral collaboration model to bring itself out of the logjam. The industry needs a model of collaborative advantage. The author in his blog post titled, “A New Theory of Generic Collaborative Strategy: Adding Value to Porter’s Generic Competitive Strategies, Strategy Musings, March 24, 2013 propounded an alternative but supplemental approach to industry analysis (http://cbrao2008.blogspot.in/search?q=A+new+Theory+of+generic+collaborative+strategy).

The blog post proposed in the generic collaborative strategy five collaborative value drivers. These are the values of co-integration, co-development, co-fulfillment, co-expansion, co-diversification and co-saturation. These value drivers are achieved collaboratively with suppliers, innovators, customers, new entrants and also all the players within the industry. By leveraging the collaborative value drivers, a firm can ensure competitive operations, optimized investments, innovative products and processes, enhanced consumer choice and larger market. As opposed to competitive strategy which seeks to increase the value of the firm on a relative basis at the cost of related as well as competing stakeholders, collaborative strategy drives up the value of the firm and its stakeholders simultaneously.  

The collaborative model is essential for the Indian aviation industry to come out of the woods. Co-integration would require development of a total air transportation value chain involving ground handlers, caterers, airport authorities, maintenance hangars, air travel booking agencies much as automobile industry works with its component suppliers and logistics providers. Co-development requires that current plans leverage current enablers and future enablers are developed to meet future plans.  Currently, the infrastructure at the Indian airports dictates the airliners’ fleet mix and route planning (apart from regulatory licenses); for example, the small runway length of certain airports rules out bigger aircraft such as Airbus A 320 while air traffic instrumentation dictates the landing hours. While airliners must advocate with government agencies to upgrade airports in all their facets, the airliners must also perforce work with a fleet mix that harmonizes with the available infrastructure.

Co-fulfillment requires that air transport must transform itself from the most economical alternative to the most preferred experience. That cannot come from mere hot food or cumulative mileage points. It comes from a belief that if one makes a booking with an airliner he or she would be provided with a total travel experience. In multi-sector travels, notably international or multi-city national, the originating airliner, for example, can offer the best option without insisting on total routing with only its aircraft or code-shared aircraft. The customer experience and loyalty that develop with sacrificing airline’s short term profits would be significant in the long term. Co-diversification would require acquiring potential technologies that could add competitive advantage to the operations. It could mean co-branding of debit and credit cards at one level or diversification into pre- and post-air travel logistics and travel portals on the other. Co-saturation would mean the ultimate collaborative strategy of networking with all agencies, public and private and central and state governments to completely saturate the Indian skies with network that covers all the cities and towns.  

Beyond the firm

It is understandable that every firm in the Indian aviation industry, be it the hallowed but loss making national carrier Air India, the favored Jet Airways, the avowed low cost airliner SpiceJet,  the profitable IndiGo or the disruptive startup AirAsia, is focused on advancing the respective airliner level occupancy factors and revenue parameters. However, the industry scenario offers few real degrees of freedom to any individual airliner. AirAsia would probably do well to play for the long term consolidation rather than short term disruptive entry while others would do well to look at collaborative revival than competitive blockage of AirAsia.  A massive collaborative transformation of the entire aviation value map is called for. The industry needs to be reinforced and pulled out of the collective dire straits through multilateral development before the individual firms can be on a sustainable growth path. The Governments and the private firms need to work together to find a lasting solution through the collaborative format discussed herein.

Posted by Dr CB Rao on June 1, 2014

Structured Spontaneity and Prepared Oratory: Cues for Immersive Communication Experiences

India has just seen a massive election with a transformative vote. Multiple parties attempted discourses and debates through their organizations and leaders but only a few eventually succeeded.  Social history teaches that logical discourse that appeals to broad masses determined the enlightenment of societies and organizations. Similarly, business history teaches us that organizations which are collaborative and communicative internally and externally achieve sustainable success. Societies and organizations require collaboration to succeed. Collaboration, in turn, needs communication to succeed. Communication is based on points of view which are exchanged in conversations or in writing. The success of communication, hence that of collaboration and the success of societies and organizations is dependent on the logic of views and their expression. Logic that is positive and sublime, like that of peace and prosperity, leads to enlightened development.

The adventurous ability to lead a sunrise industry or the competitive ability to dominate a fragmented market is based on the organizational ability to communicate within itself and with the outside world. From a corporate logo that conveys a common identity and purpose to business vision and strategy that convey a common theme, a viewpoint is consistently expressed by businesses. These tend to be institutional initiatives, well researched, well debated and well articulated. What adds to the strength and sparkle is the productivity of communication across the organization and within its broader ecosystem. Everyone has a point of view but not every point of view would be logical. Every view deserves to be expressed and listened to but rarely these processes are well accomplished; more people tend to be keen to express than listen. Business organizations can take several cues from political organizations on how organizational units can be structured, and discourses and debates accomplished to achieve aligned objectives.

Societies and organizations

Societies have several forums to communicate. In an electoral process, they vary from door-to-door word-of-mouth communication to massive road shows involving millions. Communication occurs through print as well as electronic media. Cumulative impact of governance or opposition lies embedded in social psyche. Yet, in a short span of one month, political parties are able to cover nearly a billion people to influence transformative voting pattern. Success in such marathon and daunting processes occurs through careful internal collaboration and calibrated external communication. A simple theme becomes as important as a complex manifesto and the style of communication becomes as important as substance of communication. When political leaders singularly achieve such mammoth tasks across nations there is no reason why managers and leaders should ignore the powerful impact of collaboration and communication across organizations.

The success of national political campaigns, irrespective of geography, is dependent on two sets of factors; the first set is issues and solutions while the second set is forums and cascades. Likewise, the success of business communication, irrespective of the firm, would also depend on issues and solutions on one hand and forums and cascades on the other. Unlike social forums, corporate issues, solutions, forums and cascades are more structured and continuous which has its own advantages and disadvantages. That said, it is somewhat strange that while millions of a nation could be swayed by national leaders to vote one way or the other, the few participants of a business forum tend to be diffident to efforts by managers and leaders to align and achieve. Clearly what works for social campaigns does not appear to work in terms of business campaigns. That is essentially because societies are willing to listen and follow certain themes of development while organizations tend to continuously second-guess  leadership and managerial themes.

Forums and cascades

The importance of forums and cascades is evidenced by the successes of political parties which have a strong hierarchy of organizational units and committed cadres. Here lies the important difference between how electoral processes are organized for political organizations and how leadership processes are organized for business units. The former, the savvy political organization, has committed leadership at the top and committed cadre base at the bottom, both thematically aligned, and in respect of some parties very well indoctrinated too. These two layers form a tight cone with a circle of connected cadres at the bottom and a leadership polestar at the apex, encapsulating an undecided population in cascading layers of thematic discourse, from the top as well as the bottom. The more diametrically larger the base of the thematic cone, the stronger is the grip on the voters. The top-down and bottom-up cascade make for perfect discourse. Whenever cadres lose their thematic fervor, the electoral cone becomes wobbly.

Business organizations over time have begun to eschew the classical pyramid structure and have started adopting  more square-like, or even multi-cornered, structures, which is quite different from evolution of political organizations from triangular structures to seamless, circle within circle, conical structures. Organizational design must be reassessed if thematic alignment is desired as an overriding goal. The loss in communication in totally top-down communication of business organizations is not well understood. A few all-hands auditorium meetings by themselves cannot address the challenge. Grassroots cadre indoctrination is vital. Japanese organizations accomplish this by putting their youngest employees through comprehensive company study programs and on the job training assignments, regardless of their individual functional specializations. As a result, what emerges is neither a functional personality nor an individual personality but an enterprise personality. When cadre becomes hand in hand seamlessly, the cone of alignment and achievement gets built up.

Points of view, logics of view

The other important difference between political organizations and business organizations is that in the former the leaders are elected while in the latter the leaders are selected. In the former, leaders have little opportunity to collaborate directly with the stakeholders  once the election process is over while in the latter leaders have the opportunity of direct interface with the stakeholders at all times. Business organizations thus provide a unique opportunity for discourse and debate all times. Organizations have the choice of accepting this intrinsic feature and leveraging it to unleash creative energy or fight shy of widespread discourse and debate in them. Though the benefits are recognized by them, organizations fumble at enabling discourse and debate, and eventually try to sidestep the whole process by reducing the process to directed meetings rather than freewheeling debates.

Organizations need to be empowering to enable individual points of view while individuals need to be responsible to support viewpoints with logics of view. Discourses and debates become unproductive when they are characterized by discreet silence or indiscrete rancor. Individuals who believe that silence is better to reflect their compliance would do well to remember that as team members they are morally and professionally contracted to give their best to their organizations, expression of their constructive thoughts is integral to the best. Individuals who tend to be rancorous to draw attention to themselves would do well to remember that as  team members they are morally and professionally contracted to be constructive and disciplined in their interactions. The point to note is that as long as individual viewpoints are supported by logic of views, other team members would be compelled to listen and respond.

Expressive listening

The hallmark of meaningful communication and collaboration lies in positive expression and positive listening of individual, mutual and collective viewpoints. Viewpoints need to be expressed for any discourse or debate and teamwork to be effective; the power of expression is proportional to the logic, coherence, cogency and equanimity of expression. Even the most critical thoughts can be positively expressed when expression is characterized by theses components. Positive expression is an intelligent and intellectual balance between spontaneity (which gives authenticity) and preparation (which removes negativity). The brain and mind must be developed to capture thoughts, internally articulate and validate and then only express. The skillful speaker has not only a spring full of thoughts but also the agility of mind to process them. Interestingly, the ability to powerfully and positively express comes from an ability to listen with sensitivity and responsiveness. Powerful political leaders such as Nehru, Gandhi, Obama, NTR and Modi have been orators who made listeners respond but also have been responsive to listeners through a balance of spontaneity and preparation.

Business leaders and managers must view communication as less of a task and more of an experience. Active listening happens not merely through ears but through eyes as well; whether it is a bilateral communication or multilateral communication. Active listening, as opposed to passive listening, requires that the listeners go beyond the words and look for the broader and deeper meanings of the communication; they must also see the meanings through observation of body language. The processing capability of the mind and brain mentioned above is essential for active listening. Active listeners tend to be effective speakers. Expressive listening, therefore, requires that both the speakers and listeners perform the other corresponding task simultaneously. Speakers need to be aware of the body language of the listeners to take listening cues while listeners need to process the communication and express their responses to themselves first internally. Expressive listening is a skill that comes not only with experience of participating in interactions but also with the understanding that expression and listening are two essential wheels of the cycle of communication.

Ambient meetings

Ambience marks all overwhelming experiences; from massive political road shows to selective business conferences; political orators (for example, Nehru) are effective and so are business orators (for example, Steve Jobs)   As important as oration is ambience. Successful political road shows have a rustic and earthy, open sky and sea of humanity ambience. NT Rama Rao (NTR), the legendary actor turned political leader and the founder of Telugu Desam party took mass contact to new levels through his chariot of awakening (Chaitanya Ratham). Steve Jobs took product launch events to ethereal trajectories through a powerful combination of technological works and theatrical oratory. It is important for speakers and listeners to give due attention to meeting formats, realizing that it is entirely in them to make business meetings interactive and informative.

There could be several themes for ambience; leader-led or listener-led, technology-led or human-led, concept-led or data-led, power point-led or persona-led, and so on. Business organizations have thus several formats to leverage for effective communication and collaboration. This contrasts with the rather singular option of mass contact that political organizations have. Successful political organizations succeed against the odds mainly through ambient meetings. It is important that business organizations approach meetings as more than simple task movers. The range of additional impact could be from meeting of minds to moving experiences; the former promotes collaborative harmony while the latter ensures transformative development, of both individuals and organizations. It may sound challenging but there is no other winning formula than a combination of structured spontaneity and prepared oratory to make meetings a compellingly immersive experience.

Posted by Dr CB Rao on May 25, 2014  

Decision Making at Strategic Crossroads: Managing Emotional Blinds and Reality Conundrums

Strategy is a unique process that helps firms and individuals steer their future. Many firms and individuals believe in strategic planning over a three or five year horizon and execution within the framework, inclusive of course corrections. Some, of course, do not believe in rigorous strategic planning and move into future based on aspirations. Surprisingly, despite robust planning and execution, firms and individuals face strategic crossroads. If this were not the case, behemoths like IBM and Sony would not have faced the need to divest their computer businesses. Motorola and Google would not have faced the need to divest and re-divest the Motorola mobility division respectively. Oftentimes, however, the choices would not be clear.

Strategic crossroads, and the ways to avoid and face strategic crossroads, is a concept that could add value to the strategy literature. Strategic options are an integral part of the strategy formulation process. Strategic options come with relatively clear costs and benefits. They are often laid out in pursuance of business objectives and have little emotional content, if any.  However, strategic crossroads refers to a situation where a firm or an individual feels that there is no assurance that any of the routes would offer a decisive win. Decision making in strategic crossroads has a significant emotional content. Also, options which have equal advantages, disadvantages or uncertainties qualify for defining strategic options. There is considerable literature on identifying strategic options and facilitating decision making for the options. There is, however, little clarity on decision making when faced with strategic crossroads, which this blog post attempts to fill.

Crossroads to dead-end

Physically, crossroads signifies a place where two roads meet and cross each other. Conceptually and in practice, it signifies an important point in a firm’s or an individual’s life where a decision taken to follow a route could have an irreversible impact. When someone is at crossroads, usually time is not on one’s side; nor will profitability be. At a very simple level, a heritage theatre with dilapidated infrastructure faces the crossroads of modernization, expanding as a multiplex, complete exiting from the theatre business or monetizing the real estate. At an industrial level, when a product technology that forms the bulwark of a firm’s revenues becomes obsolete and needs massive investments, the firm tends to be at crossroads of rejuvenating the technology or going for an entirely new technology, exiting the product and business altogether or in-licensing new products and businesses, for example. The decision in such circumstances is often weighed down by the emotional burden of leadership and managerial failure and a practical burden of ossified organization.

Many times, firms facing crossroads make compromised decisions. These are usually in terms of making too little an investment in product rejuvenation, balking at embracing new technology, keeping the declining products and businesses somehow alive or going in for new but inadequate technologies. As such half-hearted attempts fail to provide any impactful solution, the firm would only slip deeper into red. The ability to exit with a reasonable profit declines even more. The saga of once-upon leaders like Morepen, Koutons and Kingfisher Airlines in India indicates a shared inability to read the signs of crossroads appropriately. Kingfisher Airlines was at crossroads of consolidation versus growth, and of organic versus inorganic development when it decided to acquire the low cost airliner Air Deccan. The obviously wrong route taken has led to the progressive slide of Kingfisher Airlines. For that matter, as it exited Air Deccan itself faced similar crossroads; of riding out the low cost pressures over time versus exiting, exiting with reinvesting in a new business and adding a new business without exiting. Here again, for Air Deccan’s founder, exiting airliner business and reinvesting in air logistics business was a wrong route in combination. A wrong route taken when at crossroads can lead a firm to its final dead-end.

Emotional blinds

Decision making at crossroads is challenging not only because of difficult performance situation and uncertain revival options but also due to the emotional blinds that prevent the leaders from taking an objective review of the past and view of the future. At a professional level, one comes across cases of functional leaders who are unable to make shifts despite apparent failures (or sustained lack of progress) of their approaches. Many  public sector companies such as Jessop, Scooters India and HMT fall under this category where the professional heads and the ownership (in this case, the government) were unwilling to see the writing on the wall, and make an appropriate course correction, including revival or exit, in each case by recognizing the strategic crossroads without emotional blinkers. Such an emotion tinged approach is displayed in private enterprises as well though these are expected to be more analytical and logical in terms of profitability and sustainability. Firms in the airline, retail, realty and infrastructure industries fall in this category. There are many firms in these industries which got stalled facing crossroads, leading businesses to stages that are beyond redemption.

Emotional blinds work through several beliefs and perceptions to deter or defer meaningful action when at strategic crossroads until it is too late. The first is an ingrained belief that businesses are cyclical and, therefore, things would perforce improve; this approach fails to recognize that it is the firm’s actions, rather than the environmental cyclicality that leads to the crossroads situation most times. The second is that undertaking organizational changes in times of crossroads aggravates the already difficult position; this approach fails to recognize that organizations under stress are often in search of, and welcome, turnaround options. The third is that when at crossroads firms should minimize investments rather than commit more; this approach fails to recognize that reversal of failure and acceleration of success can only occur with investments in hardware (facilities, technology and equipment, for example) and software (people and processes, for example), the mix of hardware and software varying on a case by case basis. The fourth is that firms at crossroads cannot attract external support (financial or otherwise); this approach fails to recognize that there would always be objective supporters for objective plans.

Reality conundrums  

The root cause for emotional blinds developing in an organization is often deep and certainly not any of those emotions that underlie the strategic behaviors that are displayed when crossroads are faced. Fundamentally, the inability to understand and appreciate realism as a way of life creates emotional blinds. When an infrastructure firm which is well aware of the long term nature of infrastructure investments, protracted payback periods and the inhibitory nature of the external environment that are inherent in Indian infrastructure projects draws up plans of quick returns to the investors, the inherent unrealism of the plan becomes the core weakness for the future. Granted, no one can predict the future from internal or external perspectives and therefore no one can also come up with a realistic path forward; the concept of realism, however, is more than that. Realism is being in touch with oneself, people, organization, environment, plans, execution, results, competition, and all such stakeholder interests. Unrealism, apart from not being realistic also includes being unduly optimistic or pessimistic, unwarranted by reality.

While several emotions such as feelings of infallibility, invincibility, egoism, and such others are often touted as reasons for leaders bringing their firms to crossroads and thereafter not being able to course-correct, the root cause would still be unrealism as defined above. Being unreal and being excessively optimistic or pessimistic is at the core of all strategic crossroads issues; the run-up, paralysis and dead-end. It is not the intent of this blog post to advocate a nebulous quest for realism nor is it to decry optimism and deprecate pessimism. The fact is that for the future only an aspiration exists, and a future reality can never be seen by mortals; every plan or action, therefore, tends to be only either optimistic or pessimistic. And, many times it lies in our own hands to turn aspirations into reality. What this blog post does advocate is the need for people to be in touch with reality at every step or slide of progress. When faced with reality that is not aligned with aspiration (could be better or worse) it pays to be optimistic or pessimistic on future course as warranted.

Realism as DNA

Lest it should sound philosophical or theoretical, the blog post would clarify that realism in reality (no pun intended) is a way a person is wired and evolved from birth to think and act, talk and listen, evaluate and respond. A realistic person, like everyone else plans and acts unrealistically (that is, either too optimistically or too pessimistically) but he or she is wired to continuously measure the variance and calibrate his or her subsequent thoughts, actions, communication and collaboration. The realistic person unlike most persons does not get typified; he or she, on the other hand, is a continuously adaptive individual or leader. The realistic person, like most others, lives on, and for, aspirations; however, he or she never loses track of the variance between aspirations and the results. If the results are lower, reformatory actions are taken, and if the results are better, aspirations are set higher by such individuals and leaders.

The ability to treat optimism and pessimism as modulators to move towards realistic realization of aspirations is vital for individuals, leaders and firms. Just as being extroverted and introverted becomes relevant contextually, being optimistic and pessimistic is also contextual. Optimism drives action and aggression while pessimism enables caution and conservatism. As individuals and leaders remain realistic, and absorb and assess the aspiration-result variation realistically, they would need to apply optimism and pessimism in tandem to set high aspirations and consistently achieve them. There have been excellent case studies of institutions in India, outside the normal business milieu, which have done exactly that with their leaders being responsible for such strategic approach in no small measure. Indian Space Research Organization (ISRO) is a striking example of live-wiring realism towards consistently higher aspirations, and achieving them despite resource constraints. Individuals, leaders and firms in their strategic journeys, and those at strategic crossroads may strive to embed realism as their DNA.

Posted by Dr CB Rao on May 18, 2014

Awareness, Self-awareness and Humility: The Three Components of Sustainable Success

On May 9, 2014, there was an interesting article that appeared in the Times of India, “Humility makes CEOs from India Stand Out”, which hypothesized that the ascent of Indian origin leaders as CEOs in global corporations is related to Indians being humble by nature. The reference has been, among others, to Indra Nooyi, Chairperson of Pepsi, Satya Nadella, CEO of Microsoft, Nitin Nohria, Dean of Harvard and Rajiv Suri, CEO of Nokia Networks. There is no doubt that persons from outside the Western world would find it hard to reach apex positions in Western headquartered global corporations. This is as unsurprising as a Western executive finding it difficult to be at the helm of a Japanese corporation. National culture has probably has as much role as notional competence in influencing leadership choices. The ascent of Indians to CEO positions is, therefore, remarkable and noteworthy. 

The article quotes Govind Iyer, managing director of Egon Zehnder India, a leading executive search firm as stating that humility is the key to being a respected leader as that means the leader is receptive towards learning and professional growth. He also clarifies that humility does not mean one cannot be aggressive and extrovert. He emphasizes that these qualities need to be displayed with humility. Rajiv Burman, managing director of Lighthouse Partners, another executive search firm hypothesizes in the article that given the strong emphasis in the Indian culture on family and social relationships, the Indian leaders work very effectively in groups with humility. Vivek Chandra, country manager-India, Harvard Business Publishing considers that leaders who develop higher self-awareness tend to be more humble.  In the same article, Lynda Gratton, professor of management practice is quoted as saying that emphasis on authenticity and inner journey is a characteristic of changing leadership expectations.

Hard and soft

Leaders are expected to lead. It is therefore believed that leaders must exert their presence with knowledge, expression and execution through which they must be able to influence and align their followers. Aggression and extroversion, enjoying success every bit openly, are also considered good additions to a successful leadership profile. These may well be the ‘hard’ qualities that define leadership. Leadership built only on these hard factors tends to be vulnerable to performance dips even if performance drivers are beyond the leader’s control. Leaders need certain ‘soft’ qualities that help the leaders go beyond driving and influencing. Soft qualities are those that endear leaders to their followers. They help the leaders connect with their followers and even non-followers sustainably. Mahatma Gandhi is an enduring example of soft qualities adding sheen and sustainability to leadership. Humility has been the most prominent of Gandhi’s soft leadership qualities.

The role of humility in influencing leadership development is not well understood. Humility is the quality of being humble. Humility is the quality of thinking that one is not better than others (although one’s achievements or others’ opinions may imply so). One’s humility is never expressed but is invariably felt and experienced by others. Humility can never be a sign of weakness or passivity rather it stems out of one’s conviction and courage, in a sense. Winston Churchill stated that while it requires courage to stand up and speak out it also requires courage to sit down and listen. This is an interesting concept. Individuals who are humble to face constructive challenges are often able to discover their own abilities or learn new capabilities that help manage them. The earlier discussed aspect of self-awareness is the foundation for developing authenticity which is capped by humility.

Awareness and self-awareness

The author in two of his earlier blog posts discussed aspects of awareness and self-awareness.  These are “Self-actualization by One’s Self for Oneself: An Enlightened Process for the Elusive Goal”, Strategy Musings, April 21, 2013 (http://cbrao2008.blogspot.in/2013/04/self-actualization-by-ones-self-for.html), and “Awareness and Resilience Management (ARM): Arming for Success and Happiness in Life”, Strategy Musings, February 3, 2013 (http://cbrao2008.blogspot.in/2013/02/awareness-and-resilience-management-arm.html). These blog posts discussed the approaches for self-awareness. The blog posts focused on individuals in a broader perspective rather than on leaders, per se (individuals, of course are leaders, and vice versa). There are two interesting concepts that the author would like to propose in this blog post. The first is whether an increase in awareness leads to a correlated increase in self-awareness. The second is whether self-awareness is enhanced or impeded by awareness, especially at leadership level.

As regards the first, the comprehensiveness of one’s awareness largely determines how well awareness leads to self-awareness. If one, for example, gets focused only on material aspects of professional life or personal life, it is unlikely that one would be appreciating the need for self-awareness. Self-awareness has a significant philosophical and spiritual content of which one would need to be aware of; this helps one to be appreciative of the need for self-awareness, and the paths towards that. As regards the second, individuals tend to lose self-awareness as they become more aware of the material aspects of success or failure. Success blinds one to one’s weaknesses and the need to overcome them while failure may cause one to lose confidence in one’s strengths and remain vulnerable to one’s weaknesses. As one moves on the leadership journey or the broader life journey, one would need to recognize development of self-awareness as an important component of developing awareness. 

Outcomes as inputs

While awareness and self-awareness can be developed as conscious processes, outcomes are important inputs in the awareness journey. The simplest example of outcome-driven awareness development is the examination system. The success or failure, and the rank achieved in each case acts as a trigger for enhancing one’s awareness. As one moves from broad generic school level courses to more focused college and university courses, and thereafter to industrial, business or academic employment aptitude tests help develop self-awareness. Outcomes in work environment and in leadership journey become harder to relate, despite all the efforts to define accountability and responsibility. Individuals would need to possess an elevated and discerning sense of outcomes as related to their contributions or non-contributions as part of the self-awareness journey.

At individual level, there are three imperatives for awareness and self-awareness balance. The first is a determination to be aware and self-aware. This can be achieved through a quest for all-round knowledge on one hand and an openness of mind on the other hand. Curricular and extracurricular learning and on-work and off-work learning need to be strong components of the awareness processes. The second is an ability to be sensitive to quantitative and qualitative cues. The second is achieved through a conscious processing of the external realities and underlying drivers. The third is a willingness to introspect oneself vis-à-vis expectations and improve to set right expectations and achieve right results. Awareness without self-awareness could be misleading while self-awareness without awareness could be paralytic. Both need to coexist in a virtuous humility canopy.   

Authentic humility

Awareness which leads to knowledge and competencies, and self-awareness which leads to self-improvement are the ideal combination to make an individual or a leader hugely successful. The key to sustaining such success lies in humility; humility that teaches one that success need not be worn on one’s sleeve, humility that teaches that failure is a result of lack of humility, humility that teaches that there can always be scope for self-improvement, humility that teaches one to respect others, and humility that enables development of bigger individuals or leaders than oneself. It is important to note that if power and presence are required in certain contexts, they are effectively provided by stature and humility as much as by knowledge and execution. In a recent pre-launch curtain raiser of his animation super movie Kochadaiiyaan 3D (Vikram Simha in Telugu), the superstar and hero of the movie, Rajinikanth said that Kamal Hassan was a great technical actor who was perhaps the right one for such a technical movie (dubbed as India’s first performance capture photorealistic film) but God has desired that Rajini should do that. The humility of the superstar was not lost on the huge audience.

Like most emotions or soft skills, humility also can be affected and not real. Individuals can put up a charade of humility. However, authentic humility is easily distinguished from affected humility. Self-awareness is the key to genuine humility. It enables people to overcome their shortcomings through greater and better awareness, and appreciate others’ superiority or need for support to others. A self-aware leader creates success by working with and leveraging the capabilities of others capable peers. Mahatma Gandhi’s humility helped him reach out to the nation on one hand and work with other capable leaders on the other. At the institutional level as well, successful institutions which are humble are likely to achieve far greater and sustainable success than other institutions which are smug on success or impervious to criticism. If Toyota had to face unexpected recalls it was due to a belief that the best was always being done and if Toyota still retained brand equity and went on to achieve a global record production nearly of 10 million vehicles last year, the reason lies in its humility to accept that even the best was not good enough, and there was scope for self-improvement.

Posted by Dr CB Rao on May 11, 2014    

Retailing Format, Marketing Personality and Customer Service: The Three Drivers for an Indian Retail Revolution

India has today several glitzy malls with shops dedicated for homegrown brands as well as multinational brands. The retail channels are a combination of single brand retail or multi-brand retail shops. Also coexisting in the normal shopping districts are standalone shops and the ubiquitous kirana shops (mom and pop stores). Quite obviously, the investments in the mall based retailing are significantly higher than those in the more traditional ones. Frequenting the variety of shopping options, one would certainly find a step function increase in product choices but an inexplicable lag in terms of salesmanship and customer service. Even the traditional retailers seem to be less concerned about attracting customers and retaining customer loyalty. As India would continue to witness an explosive retail growth, in terms of infrastructure mainly, long term viability would depend on full utilization of such infrastructure.

The new Indian retail revolution seems to be based on mall and shop infrastructure on one hand and product portfolio on the other. Communication is largely through media advertisements and text messaging. New product launches, discount periods and festival seasons are leveraged to inform customers of product availability. The expectation of the retailers, however, largely is for customers to reach out and choose for themselves the products they need. The importance of customer service to connect the customer with the products on one hand and the retailer on the other seems to be less recognized. There is, of course, a hypothesis that the customer of today is well informed and he need not be burdened with excessive verbiage on the products. Such hypothesis misses the point that customer service has a more holistic meaning to it.

Physical and virtual

Customers are aware that there are now several options to source anything through the Internet, often at lower prices, and based on considered evaluation of alternate product characteristics. Yet, the physical format, despite its price premium, offers one unique advantage of person to person contact and a conversation to help the customer. The physical malls and shops of today seem to miss on this element all together. Even where product displays are provided, the emphasis is more on the customer-product contact than on customer-salesman contact. In rare cases where customer-sales person contact is enabled, the emphasis is more on meeting the sales target rather than on understanding and fulfilling the customer need. The two key influencers are the ratio of sales persons to customers and the marketing personality of the sales person.

It is important to note that while virtual format cannot replicate any of the unique features of the physical format, the physical format can combine the best of both the formats. At an intense level, it could be providing a suite of computers and tablets for customers to first exercising their choice short list through virtual retailing and then taking them on to more focused physical marketing. At a subtle level, it could be in terms of electronic displays that stream live the high points of the shop and its products. While the virtual format can rise up to the physical challenge by promising the earliest possible delivery (for example, the promise by amazon.in of a 24 hour delivery), the physical format can extend itself by promising wider access beyond what is on the shelves through in-store Internet kiosks. The key to the success of the physical-virtual combination lies in making browsing while shopping feasible and pleasurable.

Retailing format

Apart from multi brand and mono brand retailing options, category retailing options also exist. For example, Reliance has chosen to develop specific retailing channels and store formats for product categories such as home needs (including FMCG), footwear, apparel and electronics. Future Group also follows a similar approach with Big Bazar and Pantaloons. Tata Group has Landmark, Westside and Croma for books, apparel & accessories and electronics respectively. The logic is that such segmented retailing enables focused customer groups which can be served with better product choices in each category. The results have, however, been mixed. Given the relatively high work pressures in India, it is a moot point if consumers would like to visit dedicated shops or would prefer one location for all their needs. The success of malls is perhaps attributable to the need to have one stop retailing solution. None of these groups, however, has experimented with a monolithic retailing format such as Walmart, where their own corporate brands act as mega malls.

Indian retail may experiment with one more concept of stores within stores. Large behemoths like Hindustan Unilever and P&G may create sub-stores within the stores where all of their products can be offered as integrated solutions. This is a trend that is apparent in electronics with displays organized as per product categories and brands with dedicated sales personnel. It is the value proposition of brand loyalty and product loyalty that could determine the drive for, and success of, such a store within a store concept. Extending it further, these giants could have their own exclusive sales plazas or malls. There is, therefore, likely high scope for further evolution of the physical retailing format in multiple models. Whichever retailing model is adopted, the development of a marketing personality would be foundational for the retail success.

Marketing personality

The success of the physical format depends on the marketing personality of the shop and its sales persons. Marketing personality, like all professional personalities, gets developed based on personal attributes, education and experience. While Indian institutions are focused on developing marketing managers, little infrastructural support is available to develop the needed marketing personality in frontline sales personnel. These persons do not need statistics for market research or strategy for market penetration. They need, however, a deep understanding of consumer psychology, a thorough knowledge of product attributes, an inquisitive mind for customer needs, an empathetic approach to striking a conversation, and above all a commitment to deliver value for the customer. They are relationship managers more than sellers or marketers.

Larger hotel and hospitality chains have been quick to realize the need for frontline customer interface and have established dedicated in-house training institutions and on the job training and apprenticeship programs. Shops and malls as well as a host of other customer-facing organizations have perforce to depend on the general pool of talent from educational institutions. There are, however, only a very few institutes in India that impart the right kind of education and training for developing a well-rounded marketing personality. National Institute of Sales, founded by NIIT has been one but the country needs a lot more. On the lines of Industrial Training Institutes offering technical apprenticeship training, the country needs Marketing Training Institutes to turn out sales and marketing personnel who can support the retail revolution.  A retail outlet that has persons of appropriate marketing personality tends to acquire a customer-friendly personality of its own. If retailing format would owe its success to marketing personality, the latter in turn would need customer service as the key driver.

Customer service

Customer service has several components. The first is a warm greeting; whether a sales person welcoming a customer to the store or a field sales person greeting the homemaker or doctor, the warmth, smile and connectivity of the welcome greeting sets the tone for a customer friendly ambience. The second is a polite enquiry on what the customer is looking for. The ability to distinguish between focused and unfocused customers as well as impatient and languid customers is the key to guide them appropriately to the required store location. The third is to provide transparent and authentic product information; informed decision making by the customer leads to customer satisfaction. The fourth is to understand customer indecisiveness as an opportunity for need discovery rather than to force a buy through canvassing. The fifth is an ability to commit to getting the right product after the need discovery. As products range from high generic to high technology, the need to understand consumer psychology and align the store philosophy becomes progressively more important.

As products move higher in specificity and technology, two factors become important. The first is the ability and willingness to offer pre- and post- sales support; this is essential to ensure complete lifecycle support to the customers. The second is the ability and willingness to transform each sales transaction into relationship development; this is essential to ensure a value proposition for Indian retailing beyond products and brands. To succeed in this, the ratio of customer service executives to the customer base becomes important. Investment in people and technology would be an important component of the new retail format. People investments must focus on adequate numbers of trained marketing people. Investments in technology should focus on understanding the consumer needs better and forming a long lasting relationship with them. When Google and Facebook can collect huge amount of information on the preferences of the site visitors simply through their browsing habits, the physical stores should be in a position to supplement customer data bases with physical connectivity and emotional rapport.   

In the emerging Indian retailing milieu, as discussed in this blog post, while the choice of an appropriate and differentiated retailing format would be a key strategy consistent with each retailer’s vision, development of marketing personality and integration of customer service would be universally required to drive sustainable growth.

Posted by Dr CB Rao on May 4, 2014