Final Shift

All my blogs including this journal is now being shifted permanently to Santosh Srivastava Blog. No more original post will be appearing here. However; I'll maintain monthly summary of all my posts for random visitors.

Time Gap

There was confusion in prioritizing certain individual activities. Thank got it was weekend and i had some time to think over. But you know you can not wait for a spare time to come. The activities around always fill the gap. This time it was cricket, my most fascinating hobby, did the damage. Nevertheless with India winning, you always have a good feeling (Ind vs Aus, Firojshah Kotla, 3 rd ODI).

New beginning

I can label today as the date of new beginning because of few reasons. One i shifted all my blogs related to managemet and philosophy to my wordpress site . Two, is the launch of my daily diary online from today onwards at this page. The objective is to see the journey of learnings and achievements in time. Three, is the beginning related with Shweta on joint wish for a baby in the form of determination.

Moved Back to Old Address

My blog is now moved back to the previous site;
http://santoshsrivastava.wordpress.com/

Jinnah, Partition and freedom of Expression

It seems there is a high correlation between Jinnah and Partitions. After more than 60 years, the 'demonized' name 'Jinnah' causing a partition in BJP. Jaswant Singh, one of the front faces of BJP being expelled from party on account of differences his views and party ideology. To add more drama in the name of 'confused' ideology, Narendra Modi announces ban on the book "Jinnah--India, Partition, Independence" written by Jaswant Singh.

This incident raises few fundamental questions. Is a political ban supersedes our fundamental right of freedom of expression? In a democratic environment, who will decide presentation of history? And from a political point of view, what is ideology?

We have seen similar incidences in the name of religion several number of times. Especially in India, it's become a fashion for political parties, to define religious sentiments and ideology for the mass. Still we claim that we are in a democracy. With such a decision, BJP shows confusion in their ideology. Advocating 'Jinnah' is not against India or against Hinduism. Demonizing 'Jinnah' will only prove ignoring participation of Muslim in independence. BJP will get into a confused territory as they have lost an opportunity to change their 'Hindutva' face into a 'Secular' one. The decision of Narendra Modi, who was once compared with L K Advani for prime ministerial candidature, shows that BJP has to do a lot more to become a real national party.

Jaswant Singh's views could be a fact or just a theory; in any case it should be either respected or argued with counter theories. Ban on expression should not be a solution, at least in the largest democracy of the world.

Beauty of Full Moon

Have you ever observed beauty of full moon?

In Indian literature you can find a lot of writers and poets who has endorsed the beauty of moon as the best in the world. There are two assumptions, one the beauty is feminine in nature and other, though it is not spotless, still nothing is comparable. On feminine beauty of moon, Bollywood has its own stand in their typical romantic songs. Here again the beauty of moon is at top.

There is another fact that moon is also known for is 'crazy behavior'. The word 'Lunatic' means the same. Is there any correlation between 'Lunatic' and 'Beauty'?

You must have heard story of Tulasidas, the great poet writer of 'Ramcharitmanas', a Hindu holy book in which the character of Lord Ram is portrayed as the best in human mankind. Tulasidas had a beautiful wife named Ratnavali. He was so deeply attached with the beauty of Ratnavali that he could not afford to be without her even for a moment. Once, Ratnavali went to her fathers place for some day. During those days of separation, Tulasidas could not control his emotions and went to see her in very difficult weather. In those days, in India, even for a married couple, meeting openly used to be treated against mannerism. So, Tulasidas, thinking of Ratnavali, tried to get in her room without knowledge of anyone, through a window which was above the ground level. It is told that he could not even recognize a cobra on the wall and used the same assuming a rope to get into the room. It was embarrassing for Ratnavali, seeing her husband so crazy about her beauty; she scolded Tulasidas reminding his craziness and referred her body just as lump of flesh and blood. That incident changed Tulasidas for ever and he become ascetic.

There is no doubt that beauty attracts. When it involves your emotions we term same as love. But let us not attach love with beauty in this discussion. In the above story Tulasidas was crazily in love with beauty of Ratnavali and a small logic explained by her changed his emotions for ever.

Full moon, representing best of feminine beauty, or otherwise, if attracts our attention is natural. And like Tulasidas, if not for a longer time, even for a second, we become crazy while encountering beauty, it's normal. By this logic love at first sight and being lunatic is no different. It can be assume that being in love needs a much more passion and emotion than what we can define with logic because with logic we can not understand love.

Coaching is an Art

All CMMi (Capability Maturity Model Integration) 5 level companies have institutionalized coaching and mentoring. There are scientific patterns defined just to follow and it will make you a successful coach or mentor. There is no doubt that such system gives an structured way to define profiles of employee which can be used for their future coarse of gains in the form of rewards or otherwise in the company. However; I am a strong believer that coaching is an art and it requires a lot more than system and procedures.

In old days people striving for knowledge, search for a 'Guru'. 'Guru' is a Hindi word, which is now common in English too, meaning of which is tough to define in a single word. To understand the word 'Guru' you need to combine meaning of teacher, coach and mentor. These Gurus were great as they used to take ownership of their pupils for their evolution into the greatness in the life. They had their own style and no structural or defined rules. They had a purpose and an art in the form of their style, for instance, we can term those styles as coaching, mentoring or teaching or combination of all. Their approaches were very effective as they used to plan and execute a list of activities to eliminate the weaknesses of their pupils with or without their knowledge. We have examples of great achievers in various fields who dedicated their success to their respective Gurus.

In an organizational perspective, I mentioned four parameters required for motivation in any in one of my post. These four parameters are product, strategy, the role model and career (What Motivates You?). A coach or mentor in your role model can make you great in your approach to profession and life.

Two Concerns for Indian Market

Quick recovery of Indian stock market was driven by various factors including global recovery, an assurance of stable government and futuristic potential of Industrial growth in India. I do not have any doubt in longer term. In short run, i have two doubts which could affect performance of market.

The first is the poor monsoon, which was visible but MET has accepted and announced formally a little late. Stock market reacted and a downward pressure on prices can be seen in last three days of trade. Recently Godrej Industries chairman Mr Adi Godrej shared his view on the impact of poor monsoon on economy and estimated agricultural growth could be reduced by 5 % which means around 0.25% of overall reduction in GDP growth rate.

The second concern is, despite a good financial results in quarter one across industries, according to Crisil, India Inc's planned capex expenditure will be dropped by 25% over next three years. Any guess on impact on GDP growth? Well when share prices of almost all industry recovered in a period no one would have expected, it will be interesting to see the the impact along with growth in production capacities of various industries in near future.

Positioning Through Neuromarketing

Recently I was surfing for term neuromarketing on the web. After a great deal of digging, I found simplest definition from Wikipedia.org to restate here:

Neuromarketing is a new field of marketing that studies consumers' sensorimotor, cognitive, and affective response to marketing stimuli. Researchers use technologies such as functional magnetic resonance imaging (fMRI) to measure changes in activity in parts of the brain, electroencephalography (EEG) to measure activity in specific regional spectra of the brain response, and/or sensors to measure changes in one's physiological state (heart rate, respiratory rate, galvanic skin response) to learn why consumers make the decisions they do, and what part of the brain is telling them to do it.

My next search was on to understand the use of neuromarketing beyond color of the packaging, the sound the box makes when shaken, lights used in the store and near display. The question in my mind was how neuromarketing sinks with positioning strategy of a brand. Or is it a merely sales conversion strategy at the moment of truth? And I found a beautiful article written by Anoothi Vishal in Business Standard on August 04, 2009; “Tweaked to please” on positioning strategy of Le Meridian Hotels in India. And I would love to restate some lines from the same article here before discussing positioning through neuromarketing:

When you step in to any of the eight Le Meridien hotels in India, indeed any in the world, you should be able to smell almost as soon as you step into the lobby — emerging through a portal, an art work usually, at the hotel entrance — a peculiar scent of old books and parchment in a library. The scent machines in the lobby, not always visible except to the most discerning of the guests, are there to get you in the “right frame of mind” in sync with the hotel chain’s positioning as a destination for “guests who seek out a new perspective and cultural discovery in their travel experience”.

This is a good example of neuromarketing activity which actually demonstrates the positioning of the brand directly to the target customer. Though this is the example of a hospitality industry, neuromarketing, if properly defined, will work in any kind of industry.

COST is a Strategy

Post financial crisis of 2008, followed by fear of sustained recession, most of the players across various industries have realized the importance of four letter word COST. I define COST as a strategy which has emerged out of recession. The startegic definition of COST is explained below.

C : Collaborative Operations

O : Optimization of Resources

S : System Thinking

T : Termination

Collaborative operations: Beyond manufacturing and integration of information, beyond outsourcing, I foresee the impact of globalization will give opportunity to collaborative operations in all areas of business like sourcing, logistics and services. We have examples of airline industry where companies made a cluster through code sharing. They did it after a lot of bleeding and at the time when they were at verge of survival and death. Functions like procurements, ticketing and operations, not only simplified with a significant reduction in cost but also given an opportunity to focus on brand building and consumer experience. The other industries need not to wait for situation to be worsened to consider collaboration. They should move proactively to chart out collaborative global sourcing, logistics and customer services.

Collaborative logistics: In India a big opportunity in on the way to shake all the industries is the implementation of GST by 2010. This can open the doors of collaborative transport, warehousing and distribution. All third party logistic companies have an opportunity to expand their services. Now few companies already started planning out such options. See the following quote of Mr Pradipta Mukherjee, GCPL Vice Chairman, in one of the interview given to business standard recently:

“We would be looking at re-doing our supply chain and logistics costs once the goods and services tax (GST) is implemented from April 2010, and CST is phased out from 4 per cent to nil. We also intend to consolidate the FMCG companies in the Godrej Group, and so, post-GST implementation, we would be looking at how the group FMCG companies can get together to use common depots and supply chain. This would not only reduce cost of operations but also enable reduction of inventory levels”

Optimization of Resources: There is no end to the upper end of required resources for any task. All we need is adequate resource planning. Optimization of resources is nothing but defining just adequate numbers to all the direct cost like manpower and infrastructure. Remember all the adequate numbers can also be optimized. So it’s a continuous process. I say optimum and not the minimum as its not a cost reduction strategy, but its an strategy which will give maximum of all your manpower and infrastructure by challenging their capacity or output on a continuous basis.

System Thinking: I am a fan of Deming philosophy. So I believe that both success and failure are the outcome of good or bad systems and not the manpower. Investment in system actually reduces cost by enhancing the outcomes and efficiencies. The challenge here is not only implementation of world class practices but also how philosophy and strategy of a company can be inculcated in system itself.

Termination: This is law of nature that end of everything is certain. I suggest just deciding the end before nature does. So it will be a wise decision to get rid of not performing assets, business, and manpower as early as possible. This will reduce negative energy of the organization significantly to focus on performance and new opportunities.

Though ‘COST’ seems to be a strategy of recession manager, I feel its reliability even in better times.

Surprise the Expectation of Consumer Every Time

When we say we market is changing we should ask ourselves who is changing the market? If it is not you, changes done by your company will not yield significant gain.

I am going to discuss changes in market dynamics with respect to introduction of new products. If a company is not leading the product innovation in the market, company is bound to compromise on the bottom line. In such situation the new product will be new to the portfolio of the company only but not to the market. A real new product introduction means surprise to market.

In one of my earlier post I discussed the correlation between new product introduction and market share. I listed some variables like working capital of channel, rotation of working capital and pace of introduction of new products should be properly planned well before laying out the product road map. It seems theoretical but I convincingly suggest to focus on following parameters at the time of introducing a breakthrough product to make sure that the planed gains are intact:

1. Pace of introduction. It is a philosophy of a company’s strategy which defines dynamism and youthfulness. High risk with high returns. If executed properly, it will establish a product leadership image of the company. Every successful introduction will fetch a yield, during its life cycle, much more than the cost incurred in ten mediocre or failed introductions. When we say pace, it’s important to assume the competition will copy it in no time. Pace is introduction of real products in the market, consistently with a motto to surprise expectations of the customer every time. In competitive environment it will give you a first mover advantage with better sales realization and in monopolistic environment it will increase barriers on entry of competition. The pace of introduction can be decided based on the intensity of existing competition.

2. Working capital of channel. Only new product introduction may not give the desired growth. Think this in a way that if cumulative working capital of all the channel partners is constant, the retail will only replace the existing portfolio with new one. This may give better top line because of higher realization from new product but overall volume will remain constant. If a company’s thrust is to expand, the sales volume will increase only with increase of selling capacity of the channel. This can be done with penetration into untapped market. More distributors or more retailers means more working capital. If such distribution plans are in place the real volumetric growth of new products can be assessed.

3. Cycle time: Or the speed of rotation of working capital of selling channel. This is the area which any company in any industry will love to improve. This is also a measure of supply chain performance. With the proposed implementation of GST (in India) we will see a radical shift in collaborative supply chain management with better distribution at lower cost. A longer term strategy on depot and inventory planning in line with product road map and futuristic capacity planning is required.

Need of different approach to anti piracy

The view mentioned in the topic will look controversial if the economy attached is not explained. Piracy costing more than 5 lakh jobs and a loss of around one billion dollar to bollywood. See the article in ET " Pirates of the Indian Ocean" on 18.07.2009. This is the virtual premium industry losing in the name of intellectual property. Let us not confuse my views as I am not advocating piracy, but in turn I want to highlight some of the associated economics and industry inefficiencies.

The first point is the millions of dollars of small scale unorganised industry spread all across India in manufacturing low cost VCD and DVD players. This is one of the largest unaccounted source of self employed youth who earned their skill in small assembling of these consumer electronics to the trade in the supply chain reaching a customer in rural most areas at lowest cost. The point to mention here is the incentive of the rural consumers in buying a vcd or dvd player is the availability of his favourite movie at rs 10 to rs 20 per vcd or dvd. If the cost of same increased to Rs 150 to Rs250, the self employed industry of vcd and dvd players will be crashed.

The second point is the inefficiency of the industry in providing their intellectual properties at reasonable price. If piracy can, if organised players like Moser Baer can, why not others? The government should first set pricing regulatory norms for the industry before taking any harsh action on the piracy. An efficient and transparent price mechanism will protect the incentives of the small scale industries I mentioned in first point.

The third point is different as I agree in favour of anti piracy because of its malicious supply chain originating in Pakistan. This could cost an illegal organised system of flow of goods across borders, the side effects of which need not to be explained. Government should make special task force to bust these systems. Piracy would automatically be curbed.

Air India In-action

When a government enterprise like Air India books huge losses, have you ever thought who is financing it? Government or ultimately the tax payers? Had it not been a government controlled organization, a private company in this situation could have filed for bankruptcy by now. I want to highlight few fundamental things again as consideration for AI. Lean manufacturing is a concept which revolutionased the world can be extented to other areas like lean staffing, lean service infrastructure, and lean collaboration. A government bailout or IPO could be only a temporary solution to finance the losses immediately. But for sustainable survival AI need to focus on cost rationalization, performance, quality of service and customer experiences. Remember,when you determine to become lean you need to invest in quality and services for future. Any ways, thank to government or tax payers, to make AI survive. Hope Air India to be out of "Inaction" to "IN Action".

Law of Conservation of Happiness

In a zeal to achieve something we lose a lot on the way. Is law of conservation of energy applies in life too? The energy is happiness in this hypothesis. So happiness neither can be created nor could be eliminated. Though it can be transformed from one form to another. I had witnessed some examples of high flying executives of corporate world getting heart attacks in very early stages of their life. They are pretty successful in managing their profession but not so in managing their personal life. Unhappiness of so called successful people can be seen in their sluggish desire to maintain a healthy work life balance.

If happiness is energy, containment can be termed as static energy. If one goes towards a dynamic life loses its static energy and gain kinetic one in the form of accomplishments. Being contain is not the solution to conserve the energy as being healthy and maintaining a happy family are also accomplishments.

Now if the total energy is constant, so happiness in this hypothesis, how to increase happiness? you need to convert static energy around you into dynamic opportunity for you and thus increasing the total balance. The other way could be to reduce negative energy and allow it to flow outside your area of influence into the universe.

Who Am I?

Rene Descartes, a French philosopher once said: 'I think, therefore I am'. I am thinking so my existence is established. The next question which bothers me is “I”. What is “I”? Whom we refer as “I” when we say “I am”? If I try to put my doubt simply the question is slightly different than “who am I?” Surprisingly a lot of work has been done to find out answer of the question “who am I”. The most difficult looking question has some ready-made
answer in various books and articles. Then there is a devil in me who asks a question, why are you bothered to discover who r you? How does it matter? Enjoy your life when you know the end is certain. Sometimes, devils' also get philosophical.

It looks very confusing but in reality it’s very simple. As long as I am happy and enjoying my life, nothing matters. Nice conclusion but have I ever thought that lot of things matter simultaneously to make me happy.

Then I thought of myself. Something others will also agree. I can not withstand indefinite wait. Success makes me happy. Incomplete tasks; both personal and professional, bothers me. When I lie, for any reason, I feel tensed. There are lots more similar things to list down. If I have to derive something from above, being happy is easy. Simply wish that you do not have to wait, you are always successful, you never lie and you never leave any task incomplete. Most of people will say it’s impossible. Bhagvad Gita has its saying too on this, that is, define your Dharma, the goal and do your karma for your Dharma, involved positive action, without bothering results. How one should define Dharma? Again we will have to resolve the purpose of our life or in other words the answer of the question who am I.
Back to “I think, therefore I am”. How many of us think that they really think? If I make a theory on this philosophy it would be: “My existence starts with the thinking and quality of the thinking defines our identity. And if I can find my identity, “Who am I?” is answered.”

Recession and Organizational Restructuring

Cautious recovery of stock market and second innings of government has changed the Indian economic discussions from 'recession' to 'growth'. Just few months back when various companies were innovative in changing practices to fight recession by reducing cost are now thinking optimistic for expansion and growth. I feel the greatest gain of last crisis to Indian industries are cost consciousness with eye on opportunity for growth.

In this blog i want to discuss the strategies adopted by various companies on their organizational restructuring by either splitting up for growth or consolidation for cost rationalization. Which strategy is better? Should it be a role of a recession manager or a regular activity in regular time.

Here are the examples of various companies who used either consolidation or expansion for efficiency or growth or vice-versa in last few months:

1. Bharati Airtel recasts business into nine arms to increase focus on non voice business like mobile commerce, entertainment, media, internet, enterprise services and small & medium businesses.

2. Dabur decides to split sales force, stockists to prop up market share

3. Tata Tea Brews plan for consolidation by merging tea, water and soft drink business into single entity to simplify operations and rationalize cost.

4. In the similar consolidation line Godrej announces merger of its three businesses; Godrej Consumer Products (GCPL) and two of its joint ventures — Godrej Sara Lee (GSL) and Godrej Hershey’s (GHL).

What Motivates You?

Have you ever tried to identify the key drivers which define your integrity and commitment to the organization you are working for? Lets look this question beyond pay cheques, promotions or other best HR practices. Also beyond morale and value system we have learned in our upbringing. I’ve tried to find out the answer out my own industry experience and discovered that at least one or more than one of the following four drivers are must to define your commitment and the associated approach to your work in any organization or industry:

1. The degree of believe in the product or services you are working for. The more believe more the association. The degree of believe should be to the extent that your personality can be identified with the product or services you are in.
2. The feeling of 'WOW' on the present strategies or future plans of the company. It is company's top management responsibility to make this clear and transparent down the line. It could be fully or partially in your hand too.
3. There should be a leader in the organization who should be inspiring enough to be your role model. If there are such personalities, you will find that your personality will take a radical shift. If there are no such personalities in your organization, well, there's an opportunity.
4. Last but not the least the clarity of your own carrier growth path. It should match your ambitions and futuristic financial requirements.

Well to find your motivation just asses the product or services, the strategies, the leaders of you organization and your own ambitions.

Efficient Rural Marketing

Take an off road from the highway to any village in India, you will find a different world. When you see a defined, natural and unconstructed narrow path, the village road, field with crop or in crop in waiting, small corner with panwala, chaiwala where people in small group discussing local and national issues, natural gardens with few dense trees where children are playing their own manufactured games and the ladies working on something around their home, you are in real India where more than 60% population is based. The people here do not experiment much with their traditions. They use their tacit knowledge for all professional and non professional decisions. Professional decision like when to cultivate, when to harvest, what to produce, how to sell, and other non farm decisions along with personal decision are taken based on their knowledge, they earned in centuries. Television media has reached this population but continuous electricity is still on the way. The other communication tools are radio, local news paper, and their interaction in panchayat (a frequent gathering to discuss issues related with village). Given all these the effective rural marketing is the latest concern of many organizations today. In ‘RURAL CONSUMPTION AND GROWTH’ I’ve discussed the role of government and corporate to strengthen rural consumption by investing and participating in rural India value chain. In this post I want to discuss following strategies which I feel can make rural marketing more efficient:

1. Rural Value Chain comprise of the producer (farmer), the processor, the retailer and the consumer. The organizations need to think where they are adding value. I feel vertical integration of companies dealing with agricultural product will increase the efficiency of every one in the value chain. Companies who are not dealing with agricultural output directly should participate in the development of rural infrastructure, which can be used to increase efficiency of their own distribution.

2. Share of non farm income of rural India is increasing. More than 20% of rural population earns equal to urban middle class. The rural consumption potential is big but it is not geographically concentrated. Also the taste and preferences of rural consumer are different from the urban consumers. The buying decision of rural consumer depends on following parameters:
a. Their cultural upbringing.
b. Cyclical farm and non farm earnings.
c. Trust on the product and seller.
d. Local availability.
In view of above companies focusing on rural market need to reassess their strategies on following parameter:
a. Robust product design focusing performance to build trust among rural consumer.
b. Innovative and cost efficient supply chain by involving local retailers.
c. Brand communication in local language.

3. For long term sustainable consumption of rural consumers, the corporate and government must invest in farmer’s business education. The objectives of such education should focus on following parameters:
a. What to produce? What market wants?
b. How to improve crop yield?
c. How to reduce cost of production?

In order to achieve sustainable penetration in Indian rural market, companies need to strategies’ hard from understanding rural consumers, their product related requirements, robust design and offering, right and localized communication, localized distribution and participating in rural value chain by investing in infrastructure and education for mutual gain.

Recovery In Slowdown

Last week recovery of sensex, the benchmark index of India's stock market may have given some boost to the confidence of investors and policymaker but the outlook is still doubtful.

The recent rally was inline with global recovery and driven by again FII's. In April 2009, till today, itself the FII's investment crossed 1000 cr mark. See FIIs upbeat in FY-10; invest Rs 1,000 cr in April so far

You can not rely on FIIs for sustainable growth, that is too in such global scenario when every week the investment trends surprise us. If you rely on fundamentals to asses Indian slow down, the prediction are not healthy either. See OECD report which says the slowdown in Indian market will continue. From investment perspective I suggest 'wait and watch'.

The sustainable key drivers of growth of Indian economy are truly internal and based on the fundamentals of our own economy. In the post WHY FUNDAMENTALS OF INDIAN ECONOMY IS IN QUESTION, i have tried to identify few.

Correlation between new product introduction and share of market

Lot of companies use new product introduction as their key strategy to increase there market share. Recently two companies LG and SONY announced same strategy. (You may refer following links from Economic Times for the news: LG and SONY) . Though the strategy is commonly use by various companies, I tried to validate the hypothesis that new product introductions boost market share and found following parameters (related with new product introduction only ) determine correlation between new product introduction and market share growth:

1. New product introduction helps in companies top line growth as product realization increases with speed of introduction. It is simply correlated with the differentiation till the point when the new variant becomes commodity in market. Companies with strong R&D leverage it with new products all time. Because of differentiation they fetch better price too. However, competition catches very fast especially in consumer durable industry and so the price advantage of innovation starts eroding. New product introduction should be a continuous process for the companies having strong R&D.

2. Even though top line grows in revenue term in point no. 1 above, it does not guarantee growth in market share in terms of volume of turnover. Two factors determine change in market share. One the selling capability of the channel which could be measured by working capital of sellers which in totality remains constant. If working capital of a dealer is constant it will cannibalize existing product in very first stage itself. Two is the cannibalization, which if planned properly, can help to reduce competitors’ shelf share in multi franchise sellers’ network. To increase working capital of selling network, companies should focus on wider distribution by exploring new markets through efficient supply chain management.

3. Whether the new product is introduced in one of the existing categories in which company is present or in a new category itself. If it is in existing categories it should be targeted for better profit than market share. Introduction in new category can give incremental revenue subject to capability of selling network including the organization itself in terms of knowledge, experience, working capital, coverage and branding.

4. It’s not only quantity of new introduction which matters but also the speed at which it is introduced to end consumer. Assuming if the period required by competition to replicate the product after announcement of launch is fixed, a better speed of sampling, consumer awareness activities and distribution will uplift the revenue in launch to uptake period of product life before maturity, the point at which competitor enters with similar product.

There could me many more strategies to define growth in market share, however; the above argument is only limited to issues related with new product introduction only.

NANO, IPL and Politics

This month various news covered three different takes showing successful business strategies, government intelligence and fizzled opportunism. Nano, IPL and political fuzz summarize this week’s headline.

Nano was launched with not a real product but a promissory trust by Tata, which will be delivered from July this year to common people of India. The launch looked more like a financial strategy. By the way of advance booking Tata’s not only assessing their financial and supply chain requirement but also raising funds which could ease their financial hitch which is global in nature now. It makes good business sense. Nano is a real innovation which has demonstrated Indian capability in both manufacturing and strategy. Though, the people of India should be proud of it, a lot of anti Nano SMS campaign started rolling by some people I don’t know whom. But I know it is by those who lost the opportunity which was always there to explore but they did not dare to innovate. Tata’s should not worry about this negative propaganda as their target customers are those, most of whom are not very technology savvy. This is the case of lost opportunity but our political leaders do not lose many. Post IPL shifting news of political reactions, lot of leaders politicized this issue by criticizing government on the grounds of security and national pride. My personal views are in favor of government as they took a stand which seems to be hard and conservative but it is in favor of countries biggest event, the general elections. More than that I am sure it is based on some intelligence information. If it’s true, it’s good to hear that intelligence is in place and government has courage to keep national interest above their own political interests. BCCI, too, demonstrated a business innovation by making IPL, which is truly Indian domestic sport, a global brand. Except viewer’s turnover at the matches, all the business interests are saved. What a week with good show of business strategy, intelligence and opportunism.

GOLDEN LEAVES

I saw a young man in hurry to catch the local train with a purpose. Then I saw a young boy moving his buffaloes in open field to feed them and enjoying alone by playing with a cricket ball. I also sew a sweet young couple moving along a village road, calm and cool without any talk. I see lot of similar and different people moving around with and without a purpose with some or other emotion without demonstrating any. Then I ask few questions to myself. Who among those are happy? Who among those going to create history? Who among those is both successful and satisfied with his or her success? Who among those inherited a lot to make his given identity and who’s going to create the same?
Then I saw a huge vegetation of forest land with dry but golden leaves waiting to disappear just before fall. I got some clue and some of my answer. The trees and disappearing golden leaves signify completion of a life cycle and transformation into a new one. End is not the right word so I am using completion which is destined. Good or bad, fruitful or fruitless the trees will lose their leaves. However; just before disappearing, leaves become golden representing prosperity which seems to be notional but actually not. Philosophically completion is good as it is followed by transformation and reincarnation and sets a fresh start. So in the end (actually at the completion) everything is good. All of my questions remain insignificant at this conclusion. Is that what Bhagvad Gita says as ultimate detachment?
I tried to derive the answer from Bhagvad Gita itself. The building block of human life cycle, philosophically, can be categorized into inherited wealth (money, language, religion, society etc. at the time of birth), learning (knowledge, attitude, skills, insights etc), Application of learning (KARMA), Wealth creation (Knowledge, money, language, religion, society etc) and finally dissipating wealth. In the whole process there is no physical gain. That’s why Gita questions attachment with physical gains. There should not be any confusion with inactivity. As there is a gain, the golden leaves, and the base of reincarnation, called spiritual gain. Spiritual gain comes from KARMA, the right activity for right purpose, the DHARMA, the ultimate goal. (DHARMA is not religion specific; it means the ultimate goal of human being). To know KARMA, adequate knowledge and adequate health is required to apply knowledge. This is where inheritance becomes important which is basically BHAGYA, the luck and it’s not in any one’s hand. So the only thing left is KARMA to gain real wealth. So the sights I mention in first paragraph have no difference. The real difference if can be measured with spiritual gains it would have been very easy to answer all my doubts. Even though, if I assume happiness close to spiritual gain, it’s almost impossible to decide by just watching. The rural boy playing with cricket ball and buffaloes could be happier than the chairman of a multi billion dollar company. Its difficult, so no measurement, no confusion. At the completion every things going to look like same, like golden leaves. Let’s gain a better root to make sure the new leaves waiting to sprout is more beautiful and healthy.

RURAL CONSUMPTION AND GROWTH

One of the key indicators of domestic consumption is agricultural growth. Agriculture and allied activities contribute around 20 % of GDP and feeds more than 58 % population. Now in the recent economic crisis when we started looking inward, which was right in place earlier too, for overall growth, the emerging concern is the growth of Agriculture which defines consumption pattern of India. During tenth plan (2002 to 2007) agriculture grew by merely 2.3 % against 7.6% of overall GDP growth rate.
The key issues I want to raise is the role of Indian industries and government in developing rural infrastructure, education and health, deploying policy and participating in rural value chain, pricing, insurance, credit and microcredit. Recent global economic turmoil forced us to think beyond urban population to ensure sustainable growth. Companies like Hero Honda, Marico, HUL are outperforming in today’s scenario only because of their rural penetration. Two things are common in these companies. One their product is well designed product to suit rural taste supported by (two) matching delivery mechanism. Take example of Hero Honda whose basic models (main volume and revenue generators) are well positioned for common man’s requirement like fuel efficiency and reliability. Along with their product they have matching delivery network too with widest coverage in tier two and tier three cities. Bajaj, one of the competitors of Hero Honda, closely matched their rural network compared to Hero Honda but failed to position right product. But all these strategies are meant only to take share of rural expenditure. The Indian industries should think beyond that towards participation in rural value chain and infrastructure developments. ITC’s e-Choupal is a good example where the model is not only participating in farmer’s value chain but also simplifying companies supply chain. Such innovation creates value for both company and customer. From government perspective, we need radical changes in agriculture policy, pricing mechanism, credit and insurance to farmers. Along with these a healthy investment in infrastructure, education and health will give sustainable results in long term.

Centering

Recently I had some discussion on centering with one of my seniors and discovered few insights which is worth sharing. Centering is a process of meditation in which one can concentrate all his knowledge to attain wholeness. This wholeness could be adequate enough to solve many personal or social problems. To elaborate more lets take an example of process of puzzle solving. Most of the puzzles can be resolved up to one missing data to get before final answer. It happens because we evaluate our options from some or other point of view at a time. In the process of juggling with puzzle, I am sure most of us have experienced, a stage comes when one start thinking on more than one dimensions and point of focus converts from some or other point of views to universal point of view and that is the time when one see the answer. This is the time when one sees the missing link and solves the puzzle. While centering is also the ultimate stage is when all of one’s knowledge becomes available at one point. So what? Is not it amazing to just think that you can access all your accumulated learning, insights and experiences are available to solve your problems? This is centering.

We carry different personalities which are developed in the course of our life. So we have different level of knowledge with different learning, experiences and insights. And believe me all of us have accumulated adequate knowledge to solve any of our problems. However; it’s almost impossible to use all your knowledge at one point of time. Centering through meditation is nothing but collecting all in you at one point and attain the feeling of completeness or wholeness.

The ultimate stage of centering is the point when attains all knowledge. In Hindu mythology it is often referred as “Bramha Gyan” which means knowing the Bramha, the creator of universe, the God. This is the position when one attains detachment from everything. It can be simply explained as if one knows everything, nothing remains significant. However; since gaining knowledge is a process, the centering is also a process. That is why we worship the image of Lord Shiva who is always in Yoga, the meditation or centering.

All the technical, social or philosophical discoveries are the result of centering only. It’s nothing but using your available knowledge to discover the unknown. Look around and think about all innovations and creativity, is not it scientific? If centering is a methodological process all of us can be innovative and creative. All of us can discover undiscovered and ignite multi revolutions at all levels, be it the world, the country, the society or the organization.

‘Bhagya’ and limitations of ‘Karma’

I had some busy months and few excuses of not writing. Actually it’s all about reflections and for last few weeks I was not able to feel any substance in my thought until two things happened to me. One was “Dasvidania” a Hindi movie and two; was my recent visit to one of the shopping mall in Mumbai.

‘Dasvidania’ is a movie about a person who knows that he’s gona die in next three month because of stomach cancer. And he make a list of ‘things to do’ for his rest of life. One by one he makes and completes ten wishes making his end a happier one and leaving his surroundings with a sense of accomplishments. The fact that provoked my thought is that none of us know how much time is available to complete the ‘things to do’ of life. And almost all of us even do not have ‘things to do’.

The second incidence shook my long debated believe in law of ‘Karma’. In the shopping mall there is a place specially marked for children where they got every thing to fun like jumping, dancing etc. And I saw a young boy on wheel chair, probably because of disorder from birth, staring at those of similar of his age, who were in fun, dancing and jumping. One could very easily see the helplessness in his eyes. What Karma makes him so? Why there is no level field for all?

The simplest answer is ‘the life is like that only’. We may decide our own actions but we need sound mind too to make us capable of doing so. My actions are ‘Karma’ and my sound mind is my ‘Bhagya’ or luck. There is limitation to law of ‘Karma’ as there are number of factors which we can’t decide. These factors are father, family, language, primary education etc. These are paternal assets we get as ‘Bhagya’, the luck. And if we are lucky enough to have sound mind we can decide the ‘Karma’ of our lives.

KARMA YOGA

If you believe in Karma, you would not do anything just out of habbit.
Bagavad Gita says your Karma decided fortune of your future course of life and beyond. Quality of Karma becomes top most concern as our duty. Gita also says Karma should always be directed towards duty of Dharma. Literal meaning of Dharma is religion. But its significant is above that. It is basically your ultimate goal as directed by your purest inner self. So Karma should always be for a very positive purpose and so it should be carefully designed.
Most of us will agree that more than 99% of our Karma come just out of our daily routine or habit without any purpose. Very few of us takes care of a very long term objective while deciding education or career. Our bringing up comes under a high supervision of our parents so something we can blame to our surroundings; but not all. When we start taking our own decisions we must be clear about our ultimate goal or a long term perspective of our duties. It is true for our smallest activities too. We must carefully choose our talk, letters, comments based on relatively bigger objective. It can be done by self awareness and a live consciousness while in action.

SELF CONCEPT

Recently I came across a forwarded email on speech made by Pulitzer Prize-winning author, Anna Quindlen at the graduation ceremony of an American university. There was something which made me to reflect on some of the important aspect of life.
The self concept within us can be considered to be self centric from the periphery of life; but it is not fully true. After education we, most of us, take an aspiring career and fix our routine into some well defined commands. In profession we focus most of our energy to fulfill expectations of the organization. Remaining energy is used for the expectation of parents, spouse and children. The only personal expectation which drives us seems to be promotion, salary increment or a better job in highly competitive environment which is least of personal in nature. All these convert our life from hours to days, days to years, and years to ages and in return we make stress as part of our life. By definition, in the case mentioned above, we are selfish but actually we are not as hardly we are doing anything for our real self
In the process we lose our actual requirement of real self. Have we ever reflected to notice that how quickly we are losing our hobbies, friends and love in the journey of life. Can we recall things which fascinated us and we ever thought of living with those. Hobbies for example, books, movies, travel, writing, sports or anything for that matter, can you recall the last time you actively participated to your satisfaction. Take your mobile phone and check the numbers of your old college friend and ask yourself when last time you have talked to them and shared your feeling as you used to do in college days. Think of your parents when, last time, you’d delighted them as you used to do throughout your childhood like your first step, first word, first result, first achievement and then many. Actually we are missing the real happiness which is eternal; instead we are in search of pseudo worldly things and assume those as source of happiness which is very temporary.
It is right time to rethink and discover source of eternal happiness for our real self. If we are successful in doing so the definition of “selfish” will be changed with a positive meaning. And believe me if you successfully discover real you, the other professional and family expectations will also be in right place.

Why fundamentals of Indian economy is in question?

One financial crisis in US and the equity market in the whole world shaken up with significant decline. Fundamental equations of various industries are questioned and depression took over. How safe is Indian market? All analysis indicates no fundamental error but global depression and rumors have sufficient potential to prove these analysis wrong. I should be positive but negatives can not be ignored in sudden panic environment all across.
Can you estimate how much a panic environment may create a damage? Recent rumors on ICICI bank followed by crash of its stock price is just one of the several such examples. Deposit ratios and leverage of Indian banks are much healthier than that of several top performing banks of US and Europe and still the prices are falling. Again fundamentally nothing is that bad as it is reflected in falling stock prices. Another potential damage is redemption pressure on mutual funds creating a negative cycle of further depression by killing the option of Indian MFs to use their liquidity to invest in declining market.
Let us park rumors and depression aside for a moment and try to analyze some of the fundamental issues of Indian equity market which may affect future of market after stabilizing from current turmoil.
1. First and foremost is the question of decoupling of Indian economy from US. Is it really possible? In one of the interview with Uday Kotak, director of Kotak Mahindra bank recommends that India should stop depending on global flows and start relying more on its domestic savings and domestic ability. The only question to address is the future of globalised Indian industry like IT which triggered Indian GDP growth to more than 8% in past few years and attracted most of global inflows.
2. Second is actual estimate of GDP growth. If the current situation stays for some more time, it will affect the demand. Maintaining more than 7.5% growth will be a challenge. If it drops below 6.5% which is very unlikely as the fundamentals are still okay, the global inflows will be affected.
3. Third is competition with other emerging economies especially China for preferred investment destination. Both economies are having various strengths. The differences to asses are types of governance, service vs. manufacturing capabilities and fiscal deficit vs. fiscal surplus.
4. Fourth is monetary policy. On one hand; RBI announcing further rate cut by 150 basis point, on the other inflation is still above 11%. Further cut in CRR and SLR is expected to manage the current liquidity crisis with some boost to GDP. Monetary policy will be interesting to watch if the objective is to decouple Indian economies from developed countries as I discussed in point no one above. The challenge for the policy makers is how to address issues of both Inflation and growth together.
5. And finally Upcoming union elections and the result.

“Nishkam Karma”, action without attachment

The concept of “Nishkama Karma”, action without attachment to both action/work and fruits expected there after, as mentioned in Hindu holy book Bhagwad Gita, can solve many of the management problems and can confuse few too.
One of the most popular saying of Bhagwad Gita is always misunderstood. The following stanza is always misunderstood as ” Do your work/duty without expecting any fruit/result”. Actually it is slightly different and can be explained with some more concepts mentioned in the very beginning lessons of Bhagwad Gita. I have interpreted in some different ways and tried to think it from the management perspective.
The Gita limits our domain of influence to our “Karma” only and not thereafter (ref; chapter 2, 47). So results of “Karma” are not in our hand. But if the definition of word “Karma” is analyzed closely it will confuse the above interpretation. Karma is not merely work but it is work for duty. Karma is not only activity but also it is activity with a positive purpose. When there is duty or activity with a purpose, Karma becomes Dharma. “Dharma” can be correlated with the ultimate goal of the life. So, though you should not be instrumental in making your actions bear fruit (chapter 2, 47), you may design your actions for your ultimate goal, the “Dharma”. When we talk about fruits, it is actually outcomes of your sequence of actions in the way to ultimate goal. Good or bad, there should not be any attachment to these outcomes. And so these outcomes should not divert you from your ultimate goal.
What are the benefits of detachment from fruits? As per the Gita, in advance stage of attaining yoga, there should be detachment from “Karma” too. This also have very interesting interpretation but I will try to discuss it in some other post. All these attachments creates aggression, fear and anger. Carrying forward from the conclusion in above paragraph, aggression, fear and anger have all the potential to divert you from your ultimate goal by changing your course of actions in search of pleasurable fruits. So to make your goal and your actions intact we must have stable mind. The Gita defines it as “Samatva”, evenness of mind. (chapter 2, 48).
From management perspective, replace Karma with strategy and Dharma or ultimate goal with vision or mission of the organization and all the above interpretations will hold true.
Your comments carry significant value
References from Gita
Chapter2,47; Your right is to work only and never to fruit thereof. Be not instrumental in making your actions bear fruit, nor let your attachment be to inaction.
Chapter2, 48; “Samatva”, evenness of mind is called “Yoga”.
Chapter2, 56; The sage, whose mind remains unperturbed amid sorrows, whose thirst for pleasures has altogether disappeared, and who is free from passion, fear and anger, is called stable of mind.
Chapter2,57; He who is unattached to everything, and when meeting with good and evil, neither rejoices nor recoils, his mind is stable.

Performance Indicators of FMCG Industry

Tons of technical analysis is available online on ways to pick a stock. I considered few and got confused. Why investment decisions are supported with too many technical analysis and forecasts? Interesting thing is that the rules of the game are variable and so it is not so simple. Still I dare to find some simple ways and try to understand rules of the game. To start with I’ve taken one of the largest industries, the FMCG industry. The basic question I tried to answer about the variables affecting the industry performance. Stock pick would be automatically in place if the performance indicators are known.
First and foremost is changing market dynamics with fluctuating crude oil prices and inflation. Last few months were terrible. On one side input prices are increasing resulting in thinner margin to manufacturers. On the other side the share of wallet of consumer is decreasing. Overall decrease in category demand is now become visible. Companies with better brand equity are successful in transferring this burden to consumers. However with high competition already in place every time price increase will not be a viable solution.
Second emerging market dynamics is the emergence of organized retail. In this new format, relatively weaker brands also get equal opportunity to place their products and offerings along side a stronger brand. Two things will distinctly visible in such situation. Either exclusively differentiated product or the most cost effective product will get lead in the battle. In high inflationary situation consumer would tend to choose second option in order to control the outflow from their wallets. So brand loyalty earned by various major players will be at stake. Product with very high brand equity could maintain their position till the situation improves. Weaker or moderate brands will be the target of new cost effective products or brands.
Third is the cost leadership. A company’s pro activeness towards innovation, rationalization of cost structure, capabilities in manufacturing and in outsourcing gives a long term perspective of their approach towards cost leadership.Take the example of shampoo in which a crude oil derivative is used in packaging shampoos, while PET, a petroleum-based plastic product, is employed in manufacturing hair oil bottles and packaged water bottles. Crude oil derivatives account for almost 17 per cent of the total cost of corrugated boxes. Which company is working towards other innovative solutions? Another cost iscost of distribution which is very high in FMCG sector. So efficiency of supply chain and logistics adds significant value to cost leadership.
Fourth is competition with unorganized sector and regional players. Their overhead costs are much lower than a company with national presence. Being ‘local’ gives them a very cost effective advantage of distribution and logistics. Their presence can be felt at remote rural level. But since they are small the effect of inflation are even bigger for them. Poor management and poor cash flows are other prominent concerns. So a comprehensive consolidation can also be seen in next 2 to 5 years. The companies with better cash will take this.
Let me summaries the performance indicators to address health of a FMCG company in following parameters:
1. Brand equity with competitive advantage
2. Operating profit margin to understand cost advantage
3. Distribution efficiency by evaluating rural presence
4. Proportion of outsourced manufacturing
5. Cash in hand

CATEGORY VS BRAND

One distribution channel is setting up the rules of game in today’s environment is multi franchise organized retail. Now a days the only distribution channel is prominent for the most of the consumer durable and FMCG product is organized retail. This multi franchise model is redefining challenges of branding and product management.
The older brand building activities now become category building activity. For example, imagine a manufacturer of refrigerator who successfully builds a brand and in turn customers turn up to the retail store. But inside the store, story is different. The need trigger or decision to have a refrigerator could have been augmented by the said manufacturer, but inside the store customer is open to buy any brand. For a walk in customer inside a store there are lot of variables available to take a purchase decision. It may or may not be dependent on the branding of the company which prompted the customer to consider the product.
This case implies that the older way of advertising and branding are basically building more of a category than a brand. At this point positioning of product plays a key role. The brand managers should think of which gap or problem they are solving by making a positioning of a product. Because a slight differentiation if exploited properly could play a major role in making purchase decision. These gaps or points of differentiation are available everywhere. It could be price point, product features, point of entry in customer home, geography, channel or even variables like buying need of customer, perceived value of product by the customers etc.
While positioning a product one should be very clear on competitive strategy. As in multi franchise sales network a wrong strategy will give opportunity to competition to win and set the direction of game. It’s a zero sum game. Its like a game of cards where you keep guessing of available cards with the opponents. You check your strong and weak cards along with setting trump card. You make a plan with a sequence of moves. And if your sequence of moves are ideal you can even win with your weaker cards, because you are setting the direction and opponents have to react to your move. But there is one flaw. The whole strategy is based on few real things ( strong and weak cards, trump etc) and more guess work like who are the opponents having cards stronger than your weaker cards. And an assumption that all the best cards are not in one opponents basket. So it is risky. And so it is challenging. When you put a wrong move someone else wins and then he starts setting directions to the game. Since guess work and risk are still on the table, you’ll have to wait for next opportunity to win a move and take the commands of the game back in your folds. Strong and weak cards can be replaced by competitive strengths and weaknesses of any organization.

HOBBY VS PROFESSION

There was a story on Warren Buffet. In his childhood he used to study annual report of various companies during his vacation. That was not intended to become biggest investor. Rather it was derived from his own deep interest to understand financial of a company. We call it a hobby. Fortunately Buffet’s hobby become instrumental to his success as there was no difference between his hobby and profession.
All of us have some or other interests. Only few of us posses their interests as their profession. Not surprisingly these people are more successful and satisfied in their life. When your interest become your profession, you put your passion to work along with your knowledge, skills and attitude. Moreover, when you work passionately your quality of experiences and learnings become higher. There are lot of examples in our surroundings. Most of the known sportsmen, actors, artist, musicians have followed their hobby passionately to make that their successful profession. There could be unknown people from the same category struggling to leave a mark but I am sure they must be at least satisfying their inner voice.
I am from the other category of people who’s profession and hobby are not same. However; I can derive one conclusion from the above to answer the biggest question of how to get exceptionally successfull career.
In life sometimes undoing things is not easy. For people like me, at 30, if its not late then at least not viable to pursue new career in the area of biggest hobby or interest. However; converting my profession into my biggest interests or hobby is the easiest option. Option is easy, but execution is not. Converting your profession into your hobby will require an honest effort from your inner self. There is no formula of quick conversion but an honest approach will change your professional outlook and success.

CONFUSION

There are three types of people in the world. I will explain this with an analogy of a farmer seeding his field for a healthy crop full of grains. Type one people are exceptional achievers. They get level field, healthy seeds and healthy environment. They only sow to get healthiest crop and healthiest grain. I will explain second type later. Before that here is third type. Type three are just opposite of type one. They do nothing. healthy or unhealthy, good or bad, they do not sow at all. There is a law of nature which every one knows. You will get good crop only if you sow good seed. But for the third type of people opposite is not true. Because its not like if you do not sow anything you will not get anything, instead you will get something in either case. In this case there will be weeds which will not only spoil your level field but also kill the fertility of the ground.
Now the great type two people comes into the picture. They are not given any level field. Their fields are full of weeds created by type three people. These people are real hard worker. They will first remove weeds, then they will cultivate field to make it level and suitable for sowing. Then they will sow and wait for result. And because of lost fertility of ground they will only get variable results in the form of unhealthy to semi healthy crops and grains.
My confusion is on law of Karma. People in type two are basically honest and hard working. They give their full efforts but in return they are still underachievers.
In a society type one and type two can be correlated with high class and the class wanted to upgrade to high class. Type three is parallel to the group institutionalizing evil and crime in the society. This is true in an organizational perspective too.
Confusion number two is instead of cleaning the weeds why not to clean up type three people itself. This could be biggest task to debate for execution. But at least a healthy education system, goverment and society can start the process. The effort will be useful for all of us. Who does not want level playing field and healthy conditions?

ACQUIRE POWER

Some interesting inferences from “Bhagwat Gita”* on Power.
Sun is the only known source of all the energies available on the earth. Spiritually we believe Sun acquires all the powers. Both statements are similar but look different in different context. Here is an analogy of Sun to understand definition of power.
Sun is powerful because it gives energy to all the planets surrounding him. This energy is the key of existence of all of us. Sun gives moon an opportunity to shine. And moon is known for its beauty and shine of its own. Sun never withdraw his light to moon. Sun creates order around him. For millions of years and for further millions to come, all the planets around him will be in order. All the planets are in harmony and follow certain rules. They follow one rule, the order. And this rule is same for all. By this rule sun creates justice and fairness.
So the deduced definition of power is like this. Power creates harmony and order around it. Power gives energy to others dependent on it. This energy creates self worth among all under the source of power. Power gives others an opportunity to grow and shine. Power believes in justice.
Here is the simplest formula to acquire power. Start giving others power and opportunity. Create order and justice around you. Respect self worth of others especially those following you. Once you get power, use it for universal harmony. Remember power unemployed is like power not possessed.
*“Bhagwat Gita” is vedic (Hindu) mythological holy book.