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George W Bush
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George W Bush – President of the United States, at the Atrium of the ISB’s Academic Centre
Dear Reader, This issue of the ISBInsight has interesting opinions on the hot topic of ‘Branding’. The markets are abuzz with the news of the tremendous growth potential and the huge opportunities that emerging markets present. Professors of Marketing, Marketers, Consultants – all of them see a bright future when they peek into the crystal ball, and all of them agree that the new markets need creative approaches to branding. Brands have the power to change people’s lives – and to change the world. The BRIC countries featured again in the speech of Lloyd Blankfein, the President & COO of Goldman Sachs Inc., during his maiden visit to India and the ISB. He talked about the irreversible progress of wealth creation in them. His visit and contribution of $1 million to the Centre for Analytical Finance was the high point for the ISB this last quarter. It appears that India is on a winning spree all around. With the cricket season in full swing, we were fortunate to get Harsha Bhogle and Professor Bob Stewart, who teaches Sports Management at the ISB’s Executive Programmes, together for a chat on the challenges of encouraging excellence in sports in developing countries. It was the season for the annual student led events - the ILS, Solstice, Poseidon and some unusual topics such as ‘Youth Particpation in Politics’ were discussed. The mood at the ISB has been upbeat with the entire community feeling that we in India are on the verge of something really big. The ISBInsight reﬂects this mood. We share the brief and exciting encounter with President George W Bush, when he visited the ISB on March 3, 2006. “The world needs India,” he said and added, “I am honoured to be at the ISB,” almost endorsing Brand India and Brand ISB. It was a memorable visit in which the faculty, students, staff, and entrepreneurs participated. The ‘Insight Special’ captures the visit and the reactions. It will be great if you could share your opinions on what we think. As always please email us at email@example.com
ISBInsight team Bhuvana Ramalingam Sreedevi Yadavalli Mrinal Kanti Ray Varshaa Ratnaparke Madhavilatha G Design: Trapeze Cover Illustration: Anupa Jayakrishnan Resources: Learning Resource Centre at the ISB Printed at Kala Jyothi Process Pvt. Ltd. Indian School of Business Gachibowli, Hyderabad 500032, India Phone: 91 40 23007000, Fax: 23007012 Email: firstname.lastname@example.org www.isb.edu Back Cover: The architectural splendour of the ISB buildings – A view of one of the Student Villages
Bhuvana Ramalingam Editor
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Insight Special: President George W Bush Visits the ISB
The ISB grabbed headlines the world over recently when the US President visited its campus. Our special feature captures the event.
Sandeep Dikshit – MP, Lok Sabha
Learning Lessons from Australian Sport Management
4 Cover Story: Brand Strategies in Emerging Markets
Harsha Bhogle exchanges notes with Professor Bob Stewart on how an emerging economy like India can learn from the experience of Australia in managing sport.
30 ISB Leadership Summit 2006: India Next
With emerging markets experiencing an economic boom, marketers are being challenged to ﬁnd unique brand solutions.
GSVC judges – Alice Lin, Kim Alter, & Sara Olsen
Understanding Tomorrow’s Tigers
Academicians, consultants, and industry leaders share their perspectives and practical experiences about brands that work in emerging markets.
11 Strategies for Harnessing Local Brands
Politicians and business leaders, along with an academician and a social activist, discuss the need for greater youth participation in politics, and on synergies between the government and businesses for India Next.
31 India on a High Growth Trajectory: Lloyd Blankfein, President & COO, Goldman Sachs Group Inc.
Vijay Mahajan and Kamini Banga discuss strategies that can help companies leverage their brands to create opportunities in the “86 percent” markets.
16 The Emerging Consumer 32
Lloyd Blankfein addresses the ISB students on his experience at Goldman Sachs, and compliments India on its emergence as a destination for direct investments.
Competitive Intelligence for Staying Ahead in the Market
Professor Sridhar Moorthy discusses the branding challenges for marketers considering the decreasing power of television, and increasing power of “word-of-mouse.”
19 Shouting Over the Fray: An Academic Perspective on Measuring the Impact of Advertising in a Cluttered Environment 34
Phani Tej Adidam discusses cases where CI analyses have been successfully employed by companies to stay ahead of their competitors
The Current Status of Indian Economic Sector Reforms
Professor Seshan Ramaswami on how academic research can contribute to a greater understanding of the effects of advertising in a cluttered environment.
A report on the proceedings of a unique conference organised by the Stanford Center for International Development (SCID) and the Centre for Analytical Finance (CAF), ISB.
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GSVC: Social Ventures That Look Beyond the Bottom Line
The Asia Semi Finals of the GSVC held at the ISB, attracted a lot of attention for the competition’s focus on business plans that are proﬁtable, and also provide tangible social beneﬁts.
38 The Erosion of Categorical Boundaries: Interview with Professor Hayagreeva Rao
Tejendra Khanna – Chairman, Ranbaxy Laboratories Ltd.
Three students interview Professor Hayagreeva Rao on the blurring of categorical boundaries in organisational structures.
40 My Journey with the ISB: Memoirs of an Alum
Aarthi Ramesh, Class of 2003, on the special bond that she shares with the ISB.
42 ISB Happenings
Rajendra S Pawar – Chairman, NIIT
There was plenty happening at the ISB, as always, with eminent visitors and guest speakers, student competitions, and colourful events that had the campus buzzing with activity.
44 Book Review
Rakesh Mohan – Deputy Governor, RBI
S Narayan – Former Economic Advisor to the Prime Minister of India, & Former Finance Secretary, Goverment of India
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Brand Strategies in
ountries such as China, India, Brazil, Mexico, Russia, South Korea, South Africa, Egypt, and several others, are currently experiencing a heightened consumerism owing to a boom in their economies. These countries comprise a whopping “86 percent” of the world’s market, a term used by Vijay Mahajan, former Dean of the ISB, and current holder of the Harbin Centennial Chair in Business at the University of Texas in Austin. Marketing successfully to the “86 percent” is imperative for companies that want to remain globally competitive. On the one hand, the heightened consumerism, and rapid globalisation, is presenting global marketers with immense opportunities. On the other hand, these opportunities are riddled with some unique challenges for market solutions for emerging markets are different from those for the developed
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markets. Developing and implementing these solutions often demands innovation, and an inexhaustible drive to overcome obstacles in adapting to local conditions. This is because emerging markets have some characteristics common with the more mature markets; they also exhibit features that are unique, and “regional”. Time tested brand strategies that worked very well in the developed world, sometimes fail in emerging markets, causing companies to incur losses, and lose great marketing opportunities. Some characteristics that are common to customers in both the developed and the developing economies are – an enormous appetite for devouring television entertainment while displaying a marked tendency to avoid commercials, the Net savvy consumer preferring to seek brand information through “word-of-mouse” sources rather than the conventional
“word-of-mouth” ones, etc. Academic studies also point to a “cluttered” advertising environment in emerging markets such as India, a problem earlier associated only with the mature, developed economies. What is singularly distinctive of emerging markets is a strong regional inﬂuence. The inﬂuence could be cultural, linguistic, socio-political, and even religious. Emerging markets are extremely price sensitive, as well as quality conscious. They can display a ﬁerce loyalty to a local brand in a show of “patriotism,” and also prefer a foreign brand in a show of “sophistication.” These markets demand the right mix of “glocalisation,” which is a complex tapestry of global and local attributes, and is often variable from one emerging market to another, and more perplexingly, from one region within an emerging market to another.
Our cover story is an amalgam of all these perspectives about brand strategies in emerging markets. Leading academicians and consultants share their expertise on brand strategy, while market leaders describe actual experiences in developing and marketing their brands. With companies developing a variety of solutions to meet the needs of emerging markets, what remains challenging is the need to be constantly innovative. As Dipak Jain, Dean, Kellogg School of Management, said during his address to the participants of Ikshaa – the ISB Marketing Summit, “In today’s brand strategies, the word ‘anticipation’ becomes more important than ‘prediction’. We no longer have the luxury of being reactive, we need to address not only the articulated needs of consumers, but the unarticulated needs as well.”
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Emerging economies offer fabulous potential but only to those global companies that study them well
“In US dollar terms, China could overtake Germany in the next four years, Japan by 2015, and the US by 2039. India’s economy could be larger than all but the US and China in 30 years.” “Dreaming with BRICs: The path to 2050” Goldman Sachs report, dated October 1, 2003 he report quoted above has radically changed the way the world perceives emerging economies. Yesterday’s low-cost, low-value contract manufacturers have become today’s high-potential markets, and will soon be tomorrow’s boom economies. Small wonder, then, that these economies have become the cynosure of every multinational company – from manufacturers of beer or cola, cosmetics or washing powder, cars or credit cards. The numbers show why. The “BRIC” (short for Brazil, Russia, India and China) economies are growing at a rapid pace of between 8 to 10 %, and are poised to overtake the G6 countries within 35 to 40 years in terms of their collective GDP Of these, India and China alone, . which account for over 30% of the world population, are slated to be major buyers of the world’s goods and services on the strength of the growing prosperity of their consuming classes. The big brands already have a strong presence in these markets and many more are crowding in. Growing markets, however, do not mean easy markets. Over the past decade
One common problem is that multinationals, eager to gain a ﬁrstmover advantage in these ‘El Dorado’ markets, simply duplicate the models that worked for them in developed markets.
and a half, many multinationals have rushed into emerging markets, eager to claim the millions of prospective consumers newly liberated from planned economies and protectionist barriers. Many of them burnt their ﬁngers as a result. What makes these markets tough to crack? Emerging economies have several things in common. As K Ramachandran, Executive Vice Chairman and Managing Director, Philips India Ltd, points out, “All of them are heterogeneous in nature. In contrast, most developed markets are far more homogeneous.” Thus, given the income disparities, cultural and ethical diversities, it is important to understand the subsets within the emerging markets. Besides, these economies see more economic, political and regulatory changes than the developed world. “Poor development of infrastructure, logistics inefﬁciencies, and ever-changing regulations increase operational costs and pose huge risks for global corporations,” Ramachandran adds. In this regard, India is quite representative of the emerging economies, and multinational experiences here, are typical of the problems faced in comparable markets elsewhere. One common problem is that multinationals, eager to gain a ﬁrstmover advantage in these ‘El Dorado’ markets, simply duplicate the models that worked for them in developed markets. A case in point is that of the US cereals giant Kellogg’s. It entered the Indian
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market in the early 1990s hoping to replace the puri-aloo and idli-dosa on the Indian breakfast table with high-priced cornﬂakes. The company erred on two counts. First, the concept of convenience foods in India was new, and yet to be accepted in a country in which less premium was placed on time. Second, Kellogg’s also failed to understand the breakfast habits of Indians. Unlike most Western consumers, Indians largely prefer to eat their cereal with warm milk, which turned the cornﬂakes soggy and unappealing. Kellogg’s stumbled in China too. The two biggest constraints here – as elsewhere in the developing world – are price and product awareness. Breakfast cereals are perceived as expensive. Also, the Chinese prefer their own cuisine for the traditional meals of breakfast, lunch and dinner, but they are willing to try other products as snacks. Procter and Gamble also learnt the hard way in India. P&G entered the market in 1984 through its subsidiary Richardson Vicks. It faced many problems trying to sell products that were successful in other countries, such as the soap Camay, and detergents like Ariel. It was only after heavy price reductions, and some “sachet marketing” that Ariel succeeded in picking market share. P&G now focuses on the upper-middle class urban consumers, who are more likely to buy their products like Ariel. These examples hold out a simple lesson for branding strategies of tomorrow. And this is - understanding the unique needs of the consumer in each emerging market. Korean chaebol Samsung understood this very well when it used the proposition of good health to sell a range of white goods from refrigerators to washing machines, and establish itself as a dominant player in the country. Indeed, an innate understanding of the local consumer has given many domestic brands the edge. Several of them – whether it is Nirma, CavinCare, Paras or Chandrika – have posed a signiﬁcant threat to multinationals over the years. True, part of their advantage accrues from lower cost structures. But equally, they leverage a strong knowledge of the market to provide the local consumers a sound value proposition.
This is certainly an invaluable ability. As John Goodman, CEO–India and South Asia, Ogilvy and Mather, says, “The biggest risk before multinationals is to make the economics of a product work in an emerging market.” This means multinationals have to re-engineer their business models accordingly. As an example, Goodman points to C K Ranganathan, Chairman and Managing Director of CavinKare, one of India’s top three personal care products companies. “He ﬁrst decides the price, and then goes to the drawing board,” says Goodman. Concurs Harish Bijoor, brand expert and CEO, Harish Bijoor Consults Inc: “One of the biggest risks comes from generic competition.” This occurs at the level of the commodity. And marginally above the commodity are the generic quasi-brand offerings. Bijoor gives the example of the footwear market. In India, the basic footwear market is all about hand-made sandals and chappals. This is an unbranded, base commodity on offer. Just above that, at levels of 5 - 8% margins, is the hawai chappal market. New entrants in the footwear business need to contend with these issues ﬁrst, and then position their products. Another risk emerges from the distance factor. Most multinational brands, for instance, just do not understand the language of localisation. “These brands need to go against the grain of what is being dictated to them from Seattle or Boston,” adds Bijoor. Since comparatively low purchasing power is another reality in these countries, addressing key problems works wonders. In Brazil, fast moving consumer goods giant Unilever sells Ala, a brand of detergent created speciﬁcally to meet the needs of low-income consumers who want an affordable yet effective product for laundry that is often washed by hand in river water. Politically unstable economies are risky from the multinationals’ perspective, but taking risks can also help companies garner a large market share. Take the example of Citibank in Indonesia. It chose to give its Indonesian strategy a big push in May 1998, when the country was smouldering. President Suharto had been toppled. Indonesia’s wealthy ethnic Chinese, had ﬂed
Indeed, an innate understanding of the local consumer has given many domestic brands the edge. Several of them – whether it is Nirma, CavinCare, Paras or Chandrika – have posed a signiﬁcant threat to multinationals over the years.
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(From the left) M Rammohan Rao – Dean, ISB; Partha Rakshit – MD, ACNeilsen - South Asia; Vinod Giri – Director - Marketing, SABMiller (India); Harish Bijoor – CEO - Harish Bijoor Consults Inc.; Dipak Jain – Dean, Kellogg School of Management; and Hemchandra Javeri – President, Madura Garments
the country. So had most foreign bankers. This is where Citibank saw an opportunity. Citibank’s Asian retail business head ﬂew down from the Singapore ofﬁce and kept cash machines and electronic payment systems operating. Citi staffers greeted Indonesian refugees at the Singapore airport with placards that read, “Citibank will help you. Come here”. Needless to say, many Indonesians opened accounts with Citibank. Later, taking advantage of liberal new bank rules, Citibank opened 61 branches. The number of accounts rose 300 per cent from 1998 to 1999. In the ﬁrst 12 months of operations, Citi earned a 100 percent return on its $10 million investment in the new branches. Cultural issues are another risk multinationals need to keep in mind while devising their branding strategies. For instance, the Chinese are ﬁercely patriotic. They want to buy Chinese goods, except in categories where the brand’s appeal is speciﬁcally its Western origin. So dining out at McDonald’s with family members is not perceived as appropriate due to the foreignness of the food and the brand. But young men love to take their girlfriends to McDonald’s on dates since it offers an opportunity to experience Western food and concepts. This is how McDonald’s is positioned in China. Habits and market situations also play a big role in the success of a brand. For instance, internationally, Philips compact
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ﬂuorescent lamps come with a lifespan of 10,000 hours. In India, their lifespan is 3,000 to 3,500 hours. “In Europe, people leave their lights on through the day, whereas in India, people use bulbs for four to ﬁve hours only,” says Ramachandran. So, a 10,000-hour bulb will have a life of 10 years in India, and that’s not required. The 3,000-hour bulb costs a ﬁfth of its 10,000hour counterpart. So, Philips had to design a bulb keeping the “save electricity” habit (driven by high power tariffs) in mind. The developed world laps up laboursaving concepts such as ultra-powered dishwashing detergents, ready-made meals, washing machines, etc. In emerging markets, however, labour is cheap, and consumers are willing to forego convenience or time savings in favour of low price. According to Ramachandran, this can be dealt with by addressing the “perceived value” in the eyes of the consumer. “If consumers are told that clothes washed in their washing machine are cleaner, softer, and have enhanced lives, they will buy it,” he says. This is why the penetration of washing machines is on the rise. The means of knowing a market are plenty – market research reports, selective consumer testing, seeking views from experts and consultancies, seeking a local partner who understands the market and so on. It helps to have a local management since they best understand the business environment and the regulatory norms. In fact, it is widely believed that Korean
The developed world laps up laboursaving concepts such as ultra-powered dishwashing detergents, ready-made meals, washing machines, etc. In emerging markets, however, labour is cheap, and consumers are willing to forego convenience or time savings in favour of low price.
companies LG and Samsung have succeeded in India because they used local talent. Most multinationals have chosen to go local in order to get a larger piece of the pie. Advertising as an index will reveal that most multinational brands today are extremely local in their orientation – be it the Domino’s Peppy Paneer pizza, or Sania Mirza selling Hyundai Getz. It’s “glocalisation” that works for global companies. The exceptions are premium fashion labels, high-end cosmetics, premium alcohol and IT products (like HP , IBM, SAP Cisco etc) and B2B companies. , The challenge is in coping with the developing markets’ inﬁnite heterogeneities. India is a case in point. Santosh Desai of McCann Erickson describes it as the “many Indias within India”. As he points out, “Every geographical market is a different market. In fact, very rarely would you ﬁnd a brand that is a leader in all the four geographical regions of India.” There are also stark differences between urban and rural markets in these economies. Take rural India. According to Partha Rakshit, Managing Director, ACNielsen South Asia, three bottlenecks grip the rural Indian market – purchasing power, media reach and distribution network. “Things have not changed much since the 1980s in the rural areas. It’s only mass products such as soaps and detergents that have seen a rise in consumption. And even in detergents, it is Nirma rather than HLL’s Surf that is actually consumed,” says Rakshit. Lack of communication or media
reach is another problem. Companies like Unilever and Colgate have tried to tackle that problem by putting video vans on the roads to show local movies with advertisements for their products. Companies also try to penetrate the rural market through “sachet marketing”. Sachets give access to a product and raise the aspirations of consumers who then aspire to buy a larger unit when their purchasing power increases. In fact, packaging is the ﬁrst differential that multinationals need to create for emerging markets. For instance, shampoos sold by multinationals come in smaller bottles in emerging markets, as opposed to developed markets. All the same, multinationals would be making a mistake if they assumed that emerging markets are not discerning. Today, for instance, consumers in urban India want the very best in technology – be it cars, mobile phones, television sets or washing machines. And inability to provide them the best often leads to failure. Take the example of Ford, which came into the market with a dated product – Ford Escort – in 1996. The car lost out to competition and the US car major was forced to design a product specially suited for emerging markets. This new mid-size car – Ford Ikon – is now sold in India, South Africa, Mexico and China, albeit under different brand names. Italian carmaker Fiat also brought a dated product into India. It entered the Indian market in 1997 in a joint venture with Premier Automobiles. Before that,
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Premier had a license to sell Fiat cars, which were mainly used as taxis. So, Fiat had brand perception problems at the very outset. Fiat tried to sell the Uno in 1997 on the platform of “a secure and reliable workhorse”. “Fiat sold a product that was inferior to the product they sold elsewhere,” says Goodman. So the “taxi” and “jalopy” brand perceptions were reinforced. As competition rolled in, the Indian consumer was able to compare Uno with the other products. The result – Fiat lost out in the Indian market. In contrast, Fiat is a runaway success in Brazil. As of 2005, it was the market leader in Brazil with a 25 per cent market share, followed by General Motors. Fiat Palio and Fiat Uno are amongst the ﬁve largest selling cars in Brazil. So, there is no deﬁned rule that can explain why one product fails in one emerging market and succeeds in another. This applies to intra-country markets as well. Take the case of Coke. The “thanda matlab Coca-Cola” campaign ran across India, barring the south. This region has always had a different set of advertising. Then again, you can’t have a dozen different strategies because the costs will be huge and the error quotient will go up drastically. Investing in the right kind of distribution in emerging markets is important. Multinational products would beneﬁt from being multi-layered, using a mix of direct delivery, wholesalers and distributors. This is a challenge that multinationals, more often than not, shy away from. However, the rewards of developing a ground-up distribution are high. This is illustrated by Procter and Gamble’s strategy in Russia. It rapidly expanded market coverage by appointing promising local distributors in whom it invested in terms of information technology, vans, working capital and training in exchange for a commitment to exclusively distribute P&G products. As a result, P&G became the only foreign competitor across Russia, outside of markets such as Moscow and St Petersburg. While it is true that global brand values cannot change drastically across
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geographies, relevance and value to speciﬁc consumers count. This is the challenge every multinational faces as it tries to penetrate emerging economies. Desai points out that it is vital not to overestimate a market. In the nineties, the Indian middle-class was pegged at 200 million. Soon, foreign investors realised that the middle-class had actually been over-estimated by a whopping 170 million.
Today, the picture is very different as the spin-off beneﬁts of globalisation are making developing countries more prosperous. For multinationals struggling with marginal growth in saturated developed country markets, emerging economies – India and China in particular – are being viewed as the next Big Thing. Those that learn to understand the needs of these consumers could well have found their El Dorado.
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Participants at Ikshaa 2006
Ikshaa – The Marketing Summit: Valuable Insights “Ikshaa – The Marketing Summit”, organised by the Marketing Club, generated valuable insights from a stellar list of speakers who were leaders from the industry, and academic gurus in marketing and in consultancy. The theme of the summit was “Marketing in 2020: Are Marketers Ready?” The summit brought out interesting perspectives from the speakers. There was consensus on the view that the Indian consumer would be increasingly powerful in the future, that the smaller towns in India would see tremendous growth, that the rural population would reduce considerably in numbers, and that every product would eventually become a service, bringing relationship marketing to the fore. What was singularly noteworthy was the effort of students at putting together a top-of-the-line marketing summit. “The success of Ikshaa was made possible owing to the untiring efforts of a dedicated team of students who have put in much hard work despite their hectic study schedule. We are happy that the event has set a benchmark for future batches at the ISB,” said Aakash Shah, Co-ordinator, Ikshaa, Class of 2006.
Speakers at Ikshaa: Dipak Jain – Dean, Kellogg School of Management Girish Bapat – VP Marketing, LG (India) Harish Bijoor – CEO, Harish Bijoor Consults Inc. Hemchandra Javeri – President, Madura Garments Partha Rakshit – MD, ACNielsen (South Asia) Vinod Giri – Director Marketing, SABMiller (India)
Harnessing Local Brands
period of time.” HSBC’s approach can be contrasted to Citibank, which created a more homogeneous culture and retained its identity as a U.S. bank. Mehta said that this global brand was not established overnight. “In most of the geographies in which we operate, we have been working there for a very long time, often 100 to 150 years,” he said. “We adopted a global brand strategy only when we were quite sure it would be more powerful than local brands.” When HSBC decided to use a global brand, intense debates resulted. One of the brands in the UK, Midland, had been in use since the 17th century. But the global brand with a local strategy prevailed. “This was not done lightly,” he said. In a speech in May 2004, HSBC Holding Group Chairman Sir John Bond noted that the same telecommunications and other technologies that have brought developing market outsourcing ﬁrms to the developed world are bringing global brands back home to the developing world. “The value of branding in a globalized world is enormous,” he said, adding that “brand value will be more proﬁtable than the value gained through offshoring service jobs.” Recognizing the diverse languages of different parts of the world (see the following sidebar), MTV has localized its brand around the world, as discussed in more detail in Chapter 5, “Think Young”. MTV India broadcasts primarily in Hindi, the dominant language of India, but it faces competitors broadcasting in Tamil, Telugu, and Punjabi. The company is considering launching or acquiring stations to reach listeners who don’t speak Hindi, which is the primary tongue of only 30 percent of the population. Microsoft created a platform for localizing the language of its Windows XP software. Through its Local Language
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This article is an excerpt from the book The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century by Vijay Mahajan and Kamini Banga. Vijay Mahajan is a former Dean of the ISB, and current holder of the Harbin Centennial Chair in Business at the University of Texas in Austin, and Kamini Banga is an independent marketing consultant.
iven the complexities of branding for developing markets, how can companies best leverage their local and global brands to create opportunities? The following sections discuss some strategies.
Strategy #1: Make Your Global Brands Local Companies such as MTV and HSBC have shown the power of creating a global, recognized brand that is tailored to individual markets. HSBC uses a decentralized management structure to ensure that local brands are responsive to their markets, a strategy reﬂected in its tagline of the “world’s local bank.” As an indication of the breadth of its reputation, in 2004 HSBC was named “Global Bank of the Year” by The Banker magazine, the “Most Admired Corporate Brand” by Asiamoney magazine, and the “World’s Best Bank “ by Euromoney. Five years after the launch of the global brand in the late 1990s, HSBC was already rated among the top 50 global brands. The HSBC logo may look the same around the world, but this similarity masks the fact that it is seen as a local brand across more than 90 countries. ”In most countries in which we operate, we are perceived to be a local brand,” said Aman Mehta, former CEO, in an interview. “It has been a great success story in branding.” For the strategy to be successful, HSBC has to have a superior product behind the brand, and operations really have to be local. ”The main point in talking about a local bank is demonstrating to the customer that you are totally steeped in the local economy,” Mehta said. “Even if a company talks about being local, it cannot wave a magic wand and become local. People have to be convinced of that over a very long
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Vijay Mahajan – Former Dean, ISB; and Harbin Centennial Chair in Business, University of Texas, Austin
Program, the company announced plans in March 2004 to develop Windows and Ofﬁce software in 40 languages over the following year, building on versions in the Ethiopian language of Amharic and Ukrainian and other languages. The company announced plans in November 2004 to roll out software in the 14 ofﬁcial languages of India. The brand is still Microsoft, but the experience will be quite different for people in different regions. This tailoring of the brand to these local “markets within markets,” making it relevant, will help Microsoft respond to the threat of open-source software such as Linux and expand the use of computers in these countries. Although they are smaller than the total national market, these local markets are not small by any means. The Telugu-speaking area in Andhra Pradesh has a population of nearly 76 million people – a market about the size of Egypt. The Tamil-speaking region of Tamil Nadu has more than 60 million people, about the population of the UK. As the market matures, MTV envisions that the Indian market might be treated like Europe, with different programs for different countries. Plans for Disney’s Hong Kong Disneyland theme park call for local foods and programs in two Chinese languages in addition to English. Disney also consulted a feng shui master in designing the park. After learning hard lessons with the initial missteps of EuroDisney, Disney realized that it needed to ﬁnd a delicate balance between preserving the attraction of a distinctly American brand and tailoring the experience to local tastes. Strategy #2: Use Local Brands to Establish a Market Presence Local brands can be a great asset, particularly in building a presence in a market. Anheuser-Busch recognized the value of local brands in acquiring Harbin. HSBC spent a century working with local brands in different countries before bringing them under the banner of its global brand. Around the world, Coca-Cola has relied heavily on local brands to go where its ﬂagship brand could not go. By 2004, the company owned more than 400 brands in 200 countries, earning about 70 percent of its income from outside the U.S. In
Africa, the company sells 80 brands, with local beverages such as Sparletta, Hawai, and Splash. Coke has “taught the world to sing,” but in different languages. In China, Coca-Cola offers water and tea products under its locally developed Tian Yu Di (“Heaven and Earth”) brand, a successful carbonated juice-ﬂavored drink called Smart, and a noncarbonated juice drink called Qoo, developed in Japan. It became the leading Asian juice drink in just two years. These global sales are increasingly important to Coca-Cola’s future. While its 2003 sales growth was just 2 percent in the U.S., sales grew 16 percent in China, 22 percent in India, 14 percent in Thailand, and 10 percent in Mexico. Groupe Danone SA, the French-based maker of cookies, yogurt, and mineral water, built a growing business in China by acquiring shares in local brands and by developing products for China under its own brand. By 2002, China had become its third-largest market, about equal to its sales in the U.S. The company reported growth in China of 10 percent over the prior year and proﬁts higher than the global average. Its growth was driven by the acquisition of controlling stakes in Hangzhou Wahaha Group and Guangdong Robust Group, the leader in the nation’s bottled water business. eBay has entered India, China, and other parts of the world through local acquisitions. Its international strategy has been to look for “mini eBays,” local companies that reﬂect the spirit of the original online auction company. This includes the acquisitions of EachNet and Baidu in China, the acquisition of Baazee in India, and a majority stake in Internet Auction Co. in Korea. Despite eBay’s strong brand recognition around the globe, these local brands represented particularly important portals into countries with growing Internet presence and limited retail reach. The complexities for global companies in managing these local brands can be seen in the arrest of the head of eBay’s Baazee unit in India in 2004 after a pornographic video clip was offered by a seller on the site. The manager, a U.S. citizen, faced up to ﬁve years in jail or a ﬁne of 100,000 rupees (about $2,285) for violating India’s
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Information Technology Act. Did the high proﬁle of the parent brand contribute to the ofﬁcial attention? Strategy #3: Grow Your Own Local Brands When Possible As Anheuser-Busch found with Harbin, acquiring local brands can be an expensive strategy. While some local brands are based on century-old local dynasties, it is possible to create new local brands that pay close attention to market needs. In India, the detergent brand Nirma was created in the 1960s by Karsan Patel, a chemist who made detergents in his backyard and sold them on a bicycle. Today, the brand has 15 percent of the Indian detergent market. In response to the success of Nirma and other brands, Hindustan Lever established its own lowpriced local brand, Wheel, in the 1980s. This new brand allowed the company to meet the needs of price-sensitive consumers without eroding the position of its established brands. Wheel, with a freestanding organization, became one of the dominant brands in the country. Nirma built its brand by recognizing an opportunity in the consumer shift from lowcost laundry soap to more expensive washing powder in the 1970s. Hindustan Lever and other major global ﬁrms concentrated on the high-income segment that was already using washing powder while most Indians still used economical laundry soaps. The laundry soap market was large and growing, but no one was making an effort to convert users to washing powder. Nirma moved into this local vacuum. Strategy #4: Recognize That Brands May Mean Something Completely Different Global brands may lose something (or gain something) in translation. Brands that may stand for certain qualities in the developed world may have a completely different meaning in the developing world. Companies often expect their established brands to be greeted with open arms as a sign of development – and sometimes they are. But global brands may be virtually unknown in rural areas, conveying little advantage. In many cases, the value added by a global brand is homogenized to one key value proposition – its foreignness. To the extent that this foreignness may add value,
the brands may have value in developing markets, but for different reasons than in the developed market. For example, fast-food brands such as McDonald’s, Pizza Hut, and KFC are considered upscale in developing markets. Their Western image raises the level of their brand among customers who want to be connected to the global village. This is contrary to their image and reputation in the developed world, where they are near the bottom of the food chain in luxury dining. Because of these differences in how brands are interpreted, companies need to take care in rolling out brands in the developing world. Managers need to carefully assess what the brands mean in different regions. Strategy #5: Address the Liabilities of Global Brands While global brands appear to have many advantages – such as developed-world cachet and broad recognition – they also suffer from liabilities. Multinational companies need to address these liabilities, while local rivals may be able to beneﬁt from them. For example, anti-American sentiments helped Mecca Cola challenge Coke and Pepsi among Muslim customers in Paris and other parts of the world. As well as aiding Quibla Cola in the UK and Zamzam Cola in Iran. These products are purchased by customers who like the appeal of cola but object to “Coca-Colonization.” The complexity of global and local branding can be seen in the success of Cola Turka in the Turkish soft drink market. This brand was launched in 2003 with advertising featuring U.S. actor Chevy Chase (popular in Turkey for his National Lampoon movies). It was a decidedly nationalistic brand promoted by an American celebrity who sang a traditional Turkish Boy Scout song and a Turkish-language version of “Take Me Out to the Ballgame” in advertising spots. This odd mix of local and global positioning led to a highly successful launch, provoking signiﬁcant price cuts by Coca-Cola and Pepsi. Global brands also have to be careful about attacks on local rivals and sensibilities. When a Toyota ad in a Chinese magazine showed a Toyota truck towing a Chinese rival up a muddy hill, Chinese customers were not amused by
Kamini Banga – Marketing Consultant
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this direct attack on a local brand. Toyota apologized and pulled the ads. Similarly, a Nike television ad showing U.S. basketball player LeBron James defeating a cartoon kung fu master and a pair of dragons was banned by the government for offending the “national dignity.” Local brands sometimes are helped by local distribution networks and regulators, who favor local players. Government regulators often side with the local brands over large foreign rivals. For example, Chinese courts in Beijing ruled against Toyota when it charged that local competitor Geely had ripped off the Japanese car company’s marquee. The court ruled that the logos were not that much alike and that consumers were not dumb enough to confuse Geely cars with pricier Japanese models. Although it is important to recognize the impact of anti-global and anti-American sentiments on the value of brands, this impact should not be overestimated. As protesters are throwing rocks at American fast-food restaurants, their compatriots are continuing to purchase dinner there. A 12-country study of 1,500 consumers by Douglas Holt, John Quelch, and Earl Taylor found that the “antiglobal” segment (not anti-American) constituted just 13 percent of the market. “Global citizens,“ who believe global brands, signal high quality, made up 55 percent. “Global dreamers,” who see global brands as a way to connect with the global village, accounted for 23 percent of the market. This means that nearly 80 percent of the market continues to ﬁnd value in global brands. Strategy #6: Stretch Brands Without Breaking Them Companies also need to be able to stretch their brands without breaking them. In 2004, Coke moved out of the major cities in China and India to push deeper into the smaller cities and towns, offering small bottles and low prices of about 12 U.S. cents per serving. The challenge was to address these markets without eroding its urban image. One Coca-Cola advertisement for rural Chinese markets shows a popular comic actor drinking Coca-Cola and closing
the ad with a burp. The spot is in sharp contrast to its urban advertising, which positions Coke as a sophisticated drink for the rising middle class. While Pepsi has focused more on the cities, Coke holds a 55 percent share of Chinese sodas overall, compared to 27 percent for Pepsi. But will its more countriﬁed image in rural areas erode the brand among urban customers? Procter & Gamble was able to navigate this brand-stretching successfully in China. It moved its Crest toothpaste brand, which held more than half of the high-end segment by 2000, into the middle and low ends of the market. The company launched a cheaper, rural offering under the same brand, using cheaper ingredients, priced 30 percent below its premium brand. Its marketing emphasized cavity protection over the whiter teeth that were important in the premium segment. Crest’s share of the middle market in China more than doubled from 5 percent to 12 percent from 2000 to 2002 while its premium products also increased market share from 5 to 8 percent. Surrogate brands can also be used to stretch brands. Because of constraints on liquor and cigarette advertising in many parts of the world, companies have launched surrogate brands. The company can market soda or distilled water under the same brand as the alcohol. This builds awareness of the brand without violating rules against liquor advertising. Religious restrictions often require creative solutions to branding. In Islamic countries, women’s apparel, jewelry, and fashion accessories are advertised without using models because a woman’s face cannot be shown. Advertisers work around this by showing silhouettes or women with their faces turned to the side, or they use Western models, because the restrictions don’t apply to them. These ads can be creative and effective. While typical Western advertising focuses on diamonds and other jewelry as a sign of caring, such emotional appeals do not work in Islamic markets. Instead, jewelry is positioned as an expression of wealth, prosperity, and security. Dubai’s Emirates Airline, using its central location to become one of the
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Strategy #7: Put the Brand on Wheels (or Legs) To develop brands in rural villages, companies have used banner advertisements on elephants and video vans to build brand awareness. Colgate-Palmolive, for example, drives vans into rural villages to build brand and product category awareness. These vans, designed to introduce villagers in India to the concept of brushing teeth, show half-hour infomercials on the beneﬁts of toothpaste and then distribute free samples. Whereas the company might ﬁght for a share of the supermarket shelves in cities or developed markets, in these rural villages, competition comes from local preparations made from charcoal powder and the neem tree. These local rivals have a signiﬁcant advantage in distribution because their products can be found in the surrounding countryside. Companies also team up with nongovernmental organizations (NGOs) to promote toothbrushing or other aspects of personal hygiene by combining product promotion with social action. In mediadeprived areas of the world, brands may rely much more on word of mouth and village leaders to develop the brand. Brands on the Run Branding in emerging markets deﬁnes simple formulas. These markets are neither entirely local nor entirely global, but a mix of global, national, and local brands. The success of small local brands can build new national and even global brands, such as Samsung, LG, and Haier. For certain segments and products, global brands are more appealing, but even these need to be positioned and tailored to local culture and tastes. The important thing is to recognize that markets tend to be more fragmented and branding and positioning more localized than in developed markets. It may seem obvious that companies need to think about their branding strategy country by country and even local market by local market within countries. Companies
Do You Speak Hinglish?
Think English is the language to know for business? Maybe not for long. Consider that Mandarin Chinese has the largest number of speakers in the world - a billion, including secondlanguage speakers. This is followed by English, with about half as many speakers, and then Spanish, Hindi, Arabic, Bengali, and Russian. If you want to work with the 86 percent world, you need to speak the languages of the 86 percent. Even English is being affected by the rise of the developing world. Former P&G-India CEO Gurcharan Das has commented that if the 19th century was the age of British English and the 20th century the age of American English, the 21st century may well be the era of “Hinglish” – a combination of Hindi and English used by Indian speakers.
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fastest-growing airlines in the world, has worked around concerns about hiring Muslim women as ﬂight attendants by relying primarily on foreigners.
need to develop a coherent portfolio of global and local brands. Such portfolios are apparent on the websites of companies with sophisticated global branding strategies, such as LG Electronics and Sony. They offer diverse home pages tailored to different countries showing different languages, customers, and products based on the country’s speciﬁc needs. While LG Electronics’ overall tagline “Life’s good” is the same, what a “good life“ means is interpreted market by market. In contrast to this extensive tailoring, some companies merely translate language or have only a local identity online. The portfolio of global and local brands should be shaped by the company’s brands and the demands and characteristics of speciﬁc markets within a given country. Companies need to become skilled at managing and balancing these complex portfolios based on insights from speciﬁc parts of the market. One key is to understand the roots of success for products and brands that are already successful in each market and to recognize that brands may have different meanings in these markets. What makes these brands attractive to this speciﬁc segment?
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The author of this article, Professor Sridhar Moorthy, is Professor of Marketing at the ISB, and Manny Rotman Professor of Marketing at the University of Toronto.
So what really changed? Did the Internet have any impact? I want to argue here that the answer is yes to those questions. The Internet has had a big impact, and the impact is continuing. But away from the media headlights, it is a quiet revolution. The revolution is in The Emerging Consumer. Its impact in the Indian context is perhaps years away, but the developed markets already present a case study of what to expect. As advertised, the Internet has reduced the costs of searching for information. Some people have interpreted this to mean that the role of product and service differentiation has disappeared, that branding is dead. Neither is correct. Both of those concepts remain important, and arguably even more important than before. What has changed is the nature of branding. How you differentiate, rather than whether you differentiate. How you brand, rather than whether you brand. Take online retailing. Retailing can be described on several dimensions: product assortment, own brands, shopping convenience, ambience, and service – pre-sale and post-sale. All these dimensions are available to the online retailer for differentiating itself. The ambience of the website takes over from the ambience of the bricks-and-mortar store. Shopping convenience and presales service take the form of how easy or hard it is to navigate the website, to ﬁnd the information you want as a shopper.
t has been ten years since the revolution began. I am referring, of course, to the Internet. I browsed the Net for the ﬁrst time in 1994. The browser was called Mosaic. There were a handful of websites then, and search engines with names like Archie, Veronica, Gopher, and Jughead – none of which exist now. Back then everyone was proclaiming how our lives would be changed forever by this new invention called the Internet. Traditional bricks-and-mortar stores would disappear. So would the differences between television and computers. Everything would “converge.” We would all be shopping for groceries on the Net and watching television on cell phones. Even business paradigms changed. Investment in online enterprises didn’t require proﬁts to justify. Price-earnings ratios didn’t matter either. What was important was that the start-up had “eyeballs”: “page views” for its website. The ﬁght for market share became a ﬁght for eyeballs. Both revenues and proﬁts would eventually come. How? From “stickiness” and “network externalities.” Such were the assumptions behind the dot-com boom of the late nineties. Well, the dot-com boom came and went. Investors realized that proﬁts and price-earnings ratios were important after all. Business schools, which went into a tizzy creating Internet-based curricula, suddenly found that these courses had few takers. It was back to the basics.
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The new word-of-mouth doesn’t look like the old word-of-mouth. In fact, it doesn’t involve talk at all, but rather reading and writing – in blogs, discussion forums, news groups, and review sites (like Epinion).
Of course, what is missing is the “hands on” “touch-and-feel” experience, and the instant gratiﬁcation of the real store, but this can be seen as a problem or as an opportunity. What the consumer is looking for is assurance that she will get what she desires, at the time it was promised. A reputation for accurate product descriptions and a reputation for on-time delivery provide these assurances. They also provide avenues for differentiation and branding. But note well that the online retailer has to earn this differentiation. It cannot be done through advertising. The retailer has to provide good service in order to develop a reputation for good service. While advertising might get you the ﬁrst order, how you perform on that ﬁrst order will determine whether you get repeat business and good word-of-mouth. For the manufacturer I would argue that branding and differentiation have become harder. The reasons are twofold. First, a primary means of branding is losing effectiveness. I am referring to television, the mainstay of branding for consumer goods for a millennium, which is rapidly losing its importance with the growth of the Internet. Consumer media habits are changing. Instead of watching television, the consumer is browsing the Net. And when she watches television she is increasingly skipping the commercials. TiVo-type personal video recorders are booming in North America. One of the chief attractions of these devices is that not only can the viewer timeshift his/her viewing, she/he can avoid the commercials while watching her favourite shows. Take away television, and imagerybased branding has become almost impossible. The advertising possibilities made possible by the Internet – banner ads, pop-up ads, and spam – are a poor substitute. They don’t have the richness of TV advertising – a requirement if you are trying to differentiate via imagery. Plus, they have a bad reputation. In a recent survey by Forrester, spam and pop-up ads were the least trusted advertising media. They were also the most annoying. The consumer on the Internet doesn’t seem to be open to be marketed to. The second reason branding has become more challenging is that advertising is not the only source of inﬂuence for consumers. They are talking to other consumers. Wordof-mouth is not a new concept, of course, but what has changed is its scale and scope, its speed, and its effectiveness as an alternative channel. The new word-of-mouth doesn’t look like the old word-of-mouth. In fact, it doesn’t involve talk at all, but rather reading and writing – in blogs, discussion forums, news groups, and review sites (like Epinion). And you don’t need to know someone to disseminate your opinions or access theirs. Just enter the name of the product you are seeking information about into a search engine like Google and dozens of word-ofmouth sites pop up. There is even a name
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The bottom line is that the consumer is becoming more elusive, and hard to reach. Integrated marketing on multiple media is a necessity now.
for this new generation of word-of-mouth: Consumer Generated Media (CGM). Or you could call it “word-of-mouse.” How does word-of-mouse differ from word-of-mouth? First, it is more organised. Second, it is faster. Third, its reach is wider – you are not limited to your friends, relatives and neighbours. Put it all together, and you have a potent new means of communication. Put it in conjunction with the decreasing power of television, and as a marketer, you have big branding problems. What to do if you are a marketer? One the one hand, you may ﬁnd solace in the fact that while fewer eyeballs are watching advertising on television, the ones who do, may be more responsive to it. But these may not be your most desirable targets in terms of revenue potential. Research indicates that they are likely to be the lower socio-economic groups. What other means of communication can you access to reach the more promising targets? Print magazine readership, apparently, is holding its own in the face of the Internet. That remains an avenue for developing awareness of new products and services and for brandbuilding, but as is well-known, the kind of branding you do in the print media has to be more factual and performancebased than imagery-based. The retail environment is increasingly seeing the invasion of television, and that arena may be ripe for more advertising. But will TV ads work as well in the noisy environment of a store? The movie theatre may be a more congenial environment. Two-thirds of the respondents in a recent Arbitron study said they wouldn’t mind more advertising in the movie theatre. Speaking of movies, product placement in movies is growing, and will continue to grow. The bottom line is that
the consumer is becoming more elusive, and hard to reach. Integrated marketing on multiple media is a necessity now. The nature of brand-building changes as a result. For high-ticket items, the consumer will research the Internet and ﬁnd out what reviewers and other consumers are saying. If you provide good value, then you have nothing to fear. That value becomes your brand. If you don’t provide good value, then you need to quickly ﬁnd the means to become competitive or else… For lowticket items, where the differentiation has traditionally been on imagery, the point of decision-making shifts to the store. Here the retailer is king. Instead of media advertising, merchandising at the point of sale becomes important. This is the reason trade promotion spending has exceeded advertising spending in the U.S. for many years now (56% versus 19% of total spending in 2004 according to ACNielsen). The movement towards retailer-branded products, i.e., private-labels, will continue as well. Already, in many countries in Europe and North America, private-label shares exceed 50% in some categories. Aldi, a German retailer, generates over 85% of its sales in private-labels. The Indian marketing environment is different, of course. Broadband penetration is still in its nascent stage (only 3 million subscribers in 2005 versus 40 million in China); the neighbourhood kirana store still dominates retailing; and personal video recorders are virtually non-existent. Together with rising disposable incomes, it would seem that the power of media advertising to create brands and move products has never been stronger. But going forward, it would be hard to argue that The Emerging Consumer will not emerge here.
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An Academic Perspective on Measuring the Impact of Advertising in a Cluttered Environment
The author, Professor Seshan Ramaswami, is Associate Professor of Marketing at the ISB, and Associate Professor Strategic Marketing, Singapore Management University. This article is based on his talk at the Diamond Jubilee Symposium – “Future of Advertising” – organised by the Advertising Agencies Association of India (AAAI).
seemingly permanent characteristic of management buzz on various fora is a focus on change and trendspotting. Themes such as “The Future of X,” “New Y Paradigms for the New Decade,” where the X or Y could be advertising, or marketing, or supply chain management, or retailing, or inventory control, abound in these fora. As do themes like “How Z Will Transform Your World,” where the Z could be the internet, or discount airlines, or the WTO implementation, or September 11. Somehow, it seems inevitable to all of us, that the future will be very different in fundamental ways. And that every new phenomenon will change the world forever. A corollary of that is, that if we do not do something drastic right now in anticipation of the future, then we will be crippled, or worse, cease to exist. However, the obsession to consistently worry about the future can also lead to ignoring the need to continue to improve our understanding of the basic principles of sound marketing today. Surely, the speciﬁcs of the marketing challenges of a particular space and time, matter to a product or brand manager. On the other hand, we still have a lot to learn about the fundamental nature of competitive and consumer response, regardless of whether the environment is the emerging economies or the more advanced ones, and whether in the year 1975 or 2025. Academic research, often derided for “ivory tower” mentalities, focuses almost exclusively on that kind of basic research developing new theories as well as methods. Academic research in marketing is a fairly young phenomenon, most major academic journals in marketing being just 2-3 decades old. The focus of this research is not on selling product
X to consumer segment Y in country Z. Instead, the focus is on understanding how various kinds of sales promotions work, how advertising affects consumer memory, or how companies should respond to price cuts amidst rapid technological innovation. I recently heard a prominent American newspaper association spokesperson talk about how the newspaper industry had changed completely all over the world. He also shared many examples of how newspapers were doing many different things to combat competition from other news sources. Yet, he continued to deﬁne his business throughout as the printed broadsheet that the printing presses put out each morning! He spoke about all the other things that the newspaper companies were doing to combat the changes, but continued to see the print newspaper as his business. An advertising agency leader recently spoke to my students here at the ISB about how ad-agencies do not see creating television advertising spots as their main product anymore, and are moving to many other innovative media like music videos, organising ﬂash mobs, sponsorships, events, etc. These are important trends, and they are triggered by changes in technology and by how consumers seek information as well as get entertained. However, the basic nature of these businesses has not changed, and perhaps never will. Not if they think of their businesses as not the printed word or the TV spot, but meeting the information and communication needs of the audience/ clients. And when business is deﬁned in these fundamental ways, theory-building research that asks fundamental questions about the nature of competitive and consumer response, becomes a powerful source of knowledge.
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Shouting Over the Fray
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Professor Seshan Ramaswami
Armed with the rich base of theory and methods, academic researchers are able to unearth effects of marketing expenditure which would be missed by the conventional commercial market research measures of unaided and aided recall and sales ﬁgures.
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Consider the speciﬁc problem of advertising in a cluttered environment. The problem is acute in mature economies, where many brands compete viciously for market share in a saturated industry. But increasingly, emerging economies are beginning to face this problem as well. In the emerging economies, growth in industries is often accompanied by the rapid growth in the media businesses too. For example, there have been two major newspaper launches in Mumbai in just the last few months, and new television channels and internet websites continue to proliferate on a daily basis. More and more brands are ﬁghting to grab the attention of the consumer, whose availability in terms of advertising processing time or space has not increased. In my Advertising course, I forced – yes, it is a tough course! – my students to watch twenty minutes of live cricket programming during the recently concluded India Pakistan cricket Test series. Their assignment was to track every single brand name that they were exposed to during that time – on players’ clothing, bats, the umpires’ coats, the scoreboard, the various pop-ups and clip-art videos celebrating boundaries and wickets, the brands advertised around the boundary, in signs that the stadium audience was holding up, etc. They had to observe the placement of the various brands and comment about which brands were getting the greatest value for money. The students listed anywhere between 12 to 40 brands in all. My own study during a Test match a couple of years ago in Chennai resulted in noting some 37 brands in a 30 minute period. It is interesting that even under conditions of concentration, there is such variance in the number of brands listed. What is even more certain is that not more than a few of those brand names will be consciously recalled by even the most avid cricket viewer. I routinely show clips of television programming interspersed with one pod
of advertising in my consumer behaviour and advertising courses at the ISB, and test for unaided advertising recall right after the clip is shown. The explicit recall of brand names, let alone brand associations and advertising messages, is almost never more than 5-6 out of the 12-13 brands that get exposure in these clips. And this is a highly concentrated and quiet classroom environment which should maximise the possibility of accurate and full recall relative to the regular noisy television viewing environment. There is plenty of money being spent on outdoors advertising, on transit modes including innovative uses such as Air Deccan’s use of the media of plane exteriors, luggage hold doors on aircraft interiors, luggage tags etc. It is very difﬁcult to measure the impact of these media spends on the long term equity of the brands being advertised. Conventional measures of sales and market share are unlikely to reﬂect the unique effects of the advertising spend, un-confounded by other marketing activity such as trade promotions, distribution changes, etc. The effects on building memory links of the brand with the category, or of the brand with positive associations, as a consequence of these expenditures, will not show up in the sales ﬁgures, or even in the conventional ‘day after’ recall measures. This is where academic researchers in marketing can contribute. Academic researchers begin with a theoretical base, which is not dependent on either the product or the locational context (whether emerging markets or advanced ones) or even on consumer segment. They are endowed with a rich set of methodological tools, experiment designs, and economic and statistical models of how both competitors and consumers respond to marketing activity. This background of theory and methods allows them to contribute to a greater understanding of the effects of advertising even in a cluttered environment.
I present three examples: The ﬁrst is a paper by Angela Lee and Aparna Labroo. In a series of experiments, they describe how the “ﬂuency” or ease of processing a brand name (or a logo or packaging) can lead to greater liking for the brand name. Thus, someone exposed to a lot of cricket broadcast may have little or no conscious recall of the multitude of brands that she/he was exposed to. Yet, the repeated exposure of the brand name in the background of the game in progress could lead to greater familiarity with, and also greater ease of processing that brand name in a competitive set. When someone enters a self service outlet like a supermarket or some of the modern self service retailers of shoes, electronic items, etc., certain brand names, models, packages may grab your attention and also evoke your liking spontaneously. Thus advertising exposures may affect your preferences even while you have little conscious awareness of that exposure. There is signiﬁcant risk in evaluating advertising expenditure only in the short run. A stream of research by Marnik Dekimpe and Dominique Hanssens uses data from the pharmaceutical industry. They evaluate the impact of advertising in medical journals using sophisticated time series analyses of data on ad spend and sales over a long period. They are able to isolate, with some precision, the effects of such advertising. Here’s a sample result from their work: “each $1000 advertising shock generates immediate prescription increases of 70, which amplify to 83 in the long run.” A third stream of work by Leonard Lodish and his colleagues, is based on a series of advertising ﬁeld experiments using split cable technology. These experiments are enabled by split cable technology which allows the broadcast of a differentiated level of ad spend to different sets of consumers on a random basis. For example, every second household can be
separated into a different group, and the two groups can be exposed to normal ad spend versus twice the normal ad spend. Their summary of multiple experiments in many categories reveals interesting results about the effects of advertising. One illustrative ﬁnding is that concentrating TV advertising versus spreading it across a longer time period results in larger brand sales. Armed with the rich base of theory and methods, academic researchers are able to unearth effects of marketing expenditure which would be missed by the conventional commercial market research measures of unaided and aided recall and sales ﬁgures. Getting a more sophisticated understanding of how the marketplace operates at a fundamental level can lead to rich rewards in the long run to companies that help to foster and fund such research. Research focused schools like the Indian School of Business, which attract many leading scholars of marketing to teach as well as to participate in academic and industry research, can be a great source for professional marketers to tap into to improve their arsenal, and for the use of their arsenal of marketing tools.
When someone enters a self service outlet like a supermarket or some of the modern self service retailers of shoes, electronic items, etc., certain brand names, models, packages may grab your attention and also evoke your liking spontaneously.
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George W Bush, President of the United States, and David C Mulford, US Ambassador to India, at the grand Atrium of the ISB’s Academic Centre.
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I N SI G HT
SPE C I A L
President George W Bush
he ISB grabbed headlines the world over for a different reason recently. George W Bush, President of the United States, visited the ISB on March 3, 2006. It was the ﬁrst time that a US President had visited a business school in India. Rajat Gupta, Chairman of the ISB (Former Managing Director of McKinsey and Senior Partner Worldwide), received the President along with Professor M Rammohan Rao, Dean, ISB. “We are delighted that President Bush has chosen a premier management institution like the ISB for his visit. This is indeed a prestigious event for us,” said Rajat Gupta. The President was accompanied by US Secretary of State, Dr Condoleezza Rice, Mr David C Mulford, US Ambassador to India, and a few other ofﬁcials. First Lady Laura Bush joined President Bush later at the ISB, after the conclusion of the Roundtable with the group of entrepreneurs, which was held at the Atrium of the imposing Academic Centre. Earlier, the Chairman and the Dean of the ISB briefed the President about the history of the school, and about the remarkable progress that it had made since the ﬁve years of its establishment. “The ISB has emerged as a world-class business management institution within a short span of time. We highlighted the success of our one year post graduate management programme to the President. We took the opportunity to emphasise our focus on entrepreneurship and cutting-edge research, especially relevant to emerging economies,” said Dean Rammohan Rao. At the Roundtable, President Bush’s interaction with the entrepreneurs focused on various aspects of Indo-US relations. To an audience consisting of members from the entire ISB community – faculty, staff and students, who ﬂanked the Roundtable on both sides – President Bush spoke on a wide range of topics that included free trade, protectionism policy, outsourcing, the civilian nuclear deal, alternative sources of energy, the growing importance of India in the global economy, and the emergence of ‘middle-class’ Indians as a precursor to the growing entrepreneurial might of Indians. “One of the reasons that I wanted to come to the ISB is that, as I understand it, it is a Centre of Excellence in education. It is a new school using innovative tools necessary to succeed.” These words were part of President Bush’s opening remarks during his address at the Atrium. “I am honoured to be at the ISB,” he added. President Bush’s easy, affable manner, and his entire demeanour, spoke of friendliness. “India is an important partner for the US not only because of trade and commerce, but also because it is a symbol of democracy and peace. It embodies the essence of democracy, and the world needs such examples to learn from,” he said. “Yesterday, I had the honour of standing on the stage with your Prime Minister talking about a new relationship between the US and India. I am excited about our strategic partnership. I’m equally excited about the future of India,” he stated. For students of the Indian School of Business, who study the phenomenal turnaround that their country has made this last decade, as it is poised to break into the top order of the global economy, it is certainly a shared excitement.
Visits the ISB
Condoleezza Rice – US Secretary of State, and Rajat Gupta – Chairman, ISB (Past Managing Director McKinsey & Senior Partner Worldwide)
“One of the reasons that I wanted to come to the ISB is that, as I understand it, it is a Centre of Excellence in education. It is a new school using innovative tools necessary to succeed.”
March 2006 | ISB insight | 23
The President’s Visit
is a Memorable Event for the ISBians
or the faculty and students of the ISB’s Class of 2006, President Bush’s visit to the ISB was indeed a memorable event. Ruchi Bansal, who, along with Rajesh Mani, had the honour of greeting President Bush on his arrival at the ISB, says, “The President’s interest in the ISB students and young entrepreneurs here can be seen as a furthering of the knowledge partnership between the two countries.”
President Bush addressing the gathering at the Atrium
During his address, President Bush referred to the growing importance of the Indian entrepreneurial class by saying, “It is in the interest of the United States that an entrepreneurial class grow in this great country.” The Entrepreneurship Centre at the ISB came in for some special words of praise by the President. He said, “It’s hard to teach people to be risk takers, and you have professors here who give you the tools to be risk takers.” Earlier, he had told Professor V Chandrasekar, Executive Director, Wadhwani Centre for Entrepreneurship Development (WCED), “You’ve got a great thing going!” Professor Chandrasekar says that globalisation has presented huge opportunities to Indian entrepreneurs by bringing their inherent creative and innovative capabilities to the fore. “Historically, entrepreneurship and development have always gone together in shaping the destinies of nations. This is a fact that the US recognises, owing to its own experience. The US also identiﬁes closely with India in this regard, as our country is undergoing a similar transition,” he says. “The President’s meeting of young entrepreneurs is signiﬁcant in the light of
24 | ISB insight | March 2006
S P ECIAL
(Seated from left to right in the foreground): Rajesh Mani – Class of 2006, ISB; Ruchi Bansal – Class of 2006, ISB; Dishan Kamdar – Assistant Professor, ISB; V Chandrasekar – Executive Director, WCED, ISB; Ajit Rangnekar – Deputy Dean, ISB; M Rammohan Rao – Dean, ISB; and others.
India’s large population of young people who are contributing to this transition through sheer dint of their creative energies,” he adds. “In many ways, the ISB itself embodies the very essence of the entrepreneurial spirit. In just four years, it has gone from strength to strength in providing world-class business management education through its innovative initiatives. The school’s many achievements have ensured that it is on the radar of important institutions of the world, the White House included,” says Rajesh Mani. One of the innovative initiatives that the ISB has undertaken involves the curriculum for its post graduate programme in business management. It is mandatory for all students to undergo a core course in entrepreneurship irrespective of what they opt for in the advanced elective courses. The course goes a long way in giving shape to the creativity and idealism in students. Anjali Patel, a student from the ISB Class of 2006 was part of the Roundtable for entrepreneurs addressed by the President. She is the President of the Net Impact Club at the ISB, and told the President that she runs the
social enterprise club with a lot of help from the faculty, the Entrepreneurship Centre, and the student body of the ISB. She also talked to the President about “compassionate capitalism” consisting of “providing venture capital funding to small businesses and social entrepreneurs so that they can sustain themselves.” Such projects use “a market based model rather than a traditional aid-based model,” she explained. Dishan Kamdar. Assistant Professor in the area of Organisational Behaviour at the ISB, adds his perspective to the President’s visit. “As the faculty representative from the ISB who greeted President Bush on his arrival here, I think that the visit endorses the ISB’s focus on cutting-edge research especially relevant to emerging economies. Not many business schools in this part of the world envision a research-oriented thrust that is so essential for global business schools. It is here that the ISB scores in terms of attracting expatriates who either come back to join school to augment a career shift, or to work here as resident or visiting faculty,” he says. “It’s a pleasure to be here at the ISB, and to have visiting dignitaries such as the President of the US,” he adds.
March 2006 | ISB insight | 25
E D U C A T I O N
Learning Lessons from Australian
E X E C U T I V E
Harsha Bhogle Interviews Bob Stewart
In this feature on Executive Education, we present the perspectives of two eminent personalities connected with sports – Harsha Bhogle, India’s leading cricket broadcaster and television personality, and Professor Bob Stewart, Associate Professor in Sport Management and Policy Programme, Victoria University, Melbourne. They exchange notes on how an emerging economy like India can learn from the experience of Australia in managing sport. Harsha Bhogle is easily the most recognised name in cricket broadcasting, and also the most popular, worldwide. He has worked extensively with the British Broadcasting Corporation (BBC), ESPN, Star Sports, Trans World International (TWI), Doordarshan, and the Australian Broadcasting Corporation (ABC). Bob Stewart was the faculty for the ﬁrst ever programme in Asia on Sport Management, conducted by the Centre for Executive Education (CEE) at the ISB, in collaboration with Sports Knowledge Australia (SKA). Harsha: You were once an ace footballer. I know that active Sportsmen don’t care too much for researchers or academicians. It’s interesting that you made the transition. Bob: Yes, but with some difﬁculty, because in academia, sports isn’t often treated very seriously. I’ve had to convince people that sport is a serious area of study. I have taken a while to carve a strong economic niche. I use my sporting background to say that it’s important to have that link between the practice of sports and the study of it. Brand management is a subject of study in all B-Schools. I wonder if sport requires brand management across the world, particularly because of increased commercialisation and globalisation of sport. It’s beginning to become a major area of interest. A number of sporting organisations around the world, and some of the more commercially driven popular clubs, are now seeing themselves as an important brand. The idea that well known sporting
26 | ISB insight | March 2006
organisations around the world have a strong brand name is an important issue for analysis. India is largely a single sport nation; we are full of what people might loosely call ‘low demand’ sports where there isn’t enough funding, nor enough professional sportspersons, and therefore there isn’t adequate viewer or spectator interest. In your experience, do we seek government help in managing ‘low demand’ sports, or focus only on managing “high demand” sports like cricket in India, and football across Europe? In Australia, we have targeted a number of sports, some of which aren’t necessarily the most popular, or the most visible sports, such as cycling. We have driven them with support, giving them facilities, and student scholarships etc. We have ensured overseas exposure to improve the proﬁle of the sport, and for bettering performances at international competitions. This has
put resources into sports, or vice versa? That’s one of the strong dilemmas that every developing country faces. One other dilemma in developing countries like India is that while a certain sport like cricket generates huge interest and money, for other sports where the government is providing infrastructure, the government tends to take its job further, and run the sport as well. I have ﬁrst-hand experience of seeing this happen in India.I don’t know whether other developing countries experience this. Maybe, the government should provide the infrastructure, and leave the running of the sport to somebody else? While government funding is crucial, it’s also important that you have advisors from the private sector that provide additional funding and facilities, and also assist in the running of major events. In Australia, we have quite a good balance in three fundamental sectors: the government provides the large physical infrastructure, the civil society or the “volunteer sector” provides enormous amount of labour and the human resource for sport, and lastly, the private sector provides funds, manages events, and also the training of professional managers. While we have been fortunate in having a good balance of the three sectors, for others, if you have one of those bleeding, then the other two develop weaknesses. Another problem that we currently face with being so cricket-centric in India is that there is cynicism about the kind of media attention and corporate assistance that cricket gets, while the other sports are not cared for. The government believes in funding and running these other sports in a bureaucratic manner, and that leads to a lack of accountability. There is a reasonable
India is largely a single sport nation; we are full of what people might loosely call ‘low demand’ sports where there isn’t enough funding, nor enough professional sportspersons, and therefore there isn’t adequate viewer or spectator interest.
Harsha Bhogle at the ISB
brought in regular attendance from the crowds. Today, Australia stands next to Great Britain as the world champions in track cycling. The government has a critical role to play in all this. But Australia has the advantages of a lot of space, and a lot of opportunity because of low population. How can the promotion of sports work in developing nations where sport has to constantly compete with other overriding requirements such as education? Australia has always valued sports as part of our popular culture. It has also been a part of our history, from the days of colonialism. Certainly, with developing countries it’s hard to convince government ofﬁcials that money should be put into sports, when it could be taken away from education, health policy etc. In some respects it’s a chicken-or-egg situation. Do you really have economic development ﬁrst, before we can
March 2006 | ISB insight | 27
E X E C U T I V E
E D U C A T I O N
Bob Stewart, Associate Professor in Sport Management and Policy Programme, Victoria University, Melbourne
amount of money in football and hockey, but the games are run so poorly that we keep slipping down the international table. You probably know that Indian hockey was at a fair peak many years ago, but has now gone into a free fall because of the lack of accountability that comes with government run sports. We need to make a concerted effort to ensure accountability and transparency – two very important aspects for a sport development system. In Australia, when the government provides funds for anybody, there are very clear expectations about what the fund is for, and how it should be used. If the outcomes are achieved, then the administrators of that particular sport are held accountable. If there is chronic underachievement, then the government will not provide money for future development. It works quite well. Do you have a problem of plenty in Australia, as with the Aussie-Rules, for example? In India, we have a problem of plenty in cricket. There’s far too much money, and there is a feeling that it may actually end up harming the sport. Can too much money actually harm a sport? The Australian Football League, the body that runs the Aussie-Rules Competition, has a single sport broadcasting contract that earns it well over 120 million dollars per year from television channels that broadcast the sport. This is in stark contrast to the 120 other sporting bodies in Australia – out of 130 – that get virtually nothing through TV broadcasts. Most of these 120 groups of smaller, or non-popular sports, ﬁnd it hard to make ends meet throughout the year. This is a worldwide dilemma. In Australia, the government supports the lesser sports by providing a ﬁnancial base.
Is large scale planning of sports then, the prerogative of developed nations? The developing countries have more pressing needs to fulﬁl, and do not look for sport planning. Some people talk of the link with GDP and Olympic medals. Somebody said that given India’s GDP we should , be looking at 11 medals. It turned out to be a ﬂawed piece of statistics, because effectively, the amount of money in Indian sport is low considering the population vs. medals equation. Quite a few studies undertaken by economists around the world suggest that there’s a very strong link between the population, and international sport success. Wealthier countries dominate international sport because they have the economic foundation to provide the resources. Most developing countries don’t enjoy the same advantage. One way to break the cycle is to target just 3 - 4 sports, or put resources into that one local sport that the population is good at, and do well in that area. Then work to coordinate the base. The media clearly plays a huge role in developing sports. I wonder how Australia tackles this, considering that it is relatively a “low media” country – just ﬁve media channels that have got to have the soaps, the news, and the sports on all the channels, two major publishing houses, and no more than four or ﬁve really national newspapers. In terms of media outlets, there’s just the state run radio that I know is big, having worked a lot over there. Australia is not like the UK, or the US, or even India – a big media country. That’s true. We have few media outlets, but we do have very strong emphasis on sport broadcasting. For instance, we have a paper in Melbourne called the Herald
“While government funding is crucial, it’s also important that you have advisors from the private sector that provide additional funding and facilities, and also assist in the running of major events.”
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Sun. In the winter months, when football is popular, they allocate up to 40 pages for sport coverage. Yes, I can see that happen for the commercial sports like the Aussie Rules, the Tennis and the Rugby League, where there’s a consumer pull anyway. What about media coverage for the non-commercial sports that the state is trying to promote? There isn’t any coverage for those. Most of them would die for the amount of coverage that football and some other sports get. But it’s a fact of life. They accept the fact that they will always be seconded, and will have a smaller share of the resources. The government’s limited funding ensures that they have a strong base, and they even achieve some level of international success. Even a high profile sport like Tennis in Australia wasn’t producing top players for almost 10 years, but now there has been a resurgence. The Australian Open has now regained its importance as a Grand Slam event. How has it been possible? We have always had a tradition of tennis in Australia. Every small country town has a tennis court – that’s part of the sporting fabric of the country. So, a lot of people play tennis at least casually, even though there may not be international success. But apart from Lleyton Hewitt, we haven’t produced world champions like we did 20 or 30 years ago. And that is one of the weaknesses in the system. The resurgence is due to the government pitching in with investing millions into the infrastructure called the Melbourne Park for the Australian Open, which has got the Australian Open back as a big event.
Did the government do that in a spirit of philanthropy, or did they hope to recover the investment, and actually make money out of the allied business generated? That’s a very good question. But, we need to see what making money really means here. Actually, the government didn’t make too much money. It didn’t cover all its costs, but the city of Melbourne beneﬁted majorly by attracting tourists. In fact, this is a great way of putting a city on the world map. The Commonwealth Games coming up in Delhi in 2010 could provide tremendous development to Delhi, and to India in general. To some extent, that happened during the Asian Games in India in ‘82 – ’83. It led to a huge television boom because they had to showcase India. But soon after that, we almost did a Montreal where the facilities were hardly being used for a long time. The ﬂagship stadium – the Jawaharlal Nehru Stadium is in a sad state now. Yes, there seems to be no point in having white elephants. Perhaps, we can make sure that once the infrastructure is created, it is actually used, and can pay for itself in 10 – 20 years. At Melbourne, we did a 450 million dollar redevelopment where we created a multifunctional park that is now mainly used for football and cricket events. How do we deal with the other more visible part of sport management – the management of sports players – liaising with networks, big money athletes requiring individual management, etc.? Is player management largely entrepreneurial, or is it a gloriﬁed one-man shop? Several athletes and sports persons have managers to look after their ﬁnancial and personal affairs. It’s becoming very important
to provide for the long term wealth of the players, as a lot of players make a huge sacriﬁce with their education, and have very little left at the end of their sporting careers. Professional player management is now an important part of sport management. It is a specialised and growing area. What is your view on how sport is evolving in Asia based on the delegates you’ve met at the ISB? India has huge potential. You have a huge population. You have got an enormous growth in general economic activity. As a result, as you become more materially well off, your sports will also take off, particularly at the professional level. I predict that the new hub of global sport will be the AsiaPaciﬁc region, 15 - 20 years from now. I hope that happens, but currently we are far too dependent on the government, which is focusing on more foreign investment into Indian industry, or on the issue of terrorism, and has little time, or the inclination to promote sport. I hope that it changes. Let me remind you of one important point. One requirement for sports development is a stable political and economic environment, and when you have got that, you will have a sporting structure on a large scale. The other requirement remains the balance of government, private, and civil society for the development of sport. Actually, my suggestion is that the government gets itself out of sports after a two-year notice period, and offer the job to leading Indian corporate houses. The Indian corporates are growing to global competence. They can be asked to adopt a sport each, and be given tax incentives for it. I hope that it happens!
March 2006 | ISB insight | 29
E X E C U T I V E
E D U C A T I O N
S U M M I T
L E A D E R S H I P
(From the left): Dr Jayaprakash Narayan – National Co-ordinator, Loksatta; Dr Chandan Mitra – MP, Rajya Sabha; and Sandeep Dikshit – MP, Lok Sabha
ISB Leadership Summit 2006
ISB Leadership Summit (ILS) 2006 was a conclave of political and business leaders, providing a unique platform for inspiring thought leadership on the theme “India Next”. The speakers were all eminent leaders and young achievers. The highlight of the event was the presence of active politicians – one from the Lok Sabha, and another from the Rajya Sabha - and a former bureaucrat turned social activist, who collectively lent important insights to the agenda.
hat does it mean to be in politics? What would motivate young Indians to join politics? What are the downsides of being in politics? Six eminent panellists avidly debated these questions in the discussion – “Youth Participation in Politics” scheduled for the forenoon programme of ILS 2006. The panellists were: • Sandeep Dikshit, Member of Parliament, East Delhi Constituency • Chandan Mitra, Member of Parliament, Rajya Sabha • Jayaprakash Narayan, Social Activist • Mudit Kapoor, Assistant Professor, Economics and Public Policy, ISB
and it could be considerably “dark and secretive”. He had experienced all these difﬁculties even though he belonged to a political family. Yet, he found it necessary to engage in politics in some way or the other, as the profession empowered one to make desirable changes. The afternoon discussion had more “practical” issues to discuss in “The Synergy between Government and Business”. The panellists were: • Satish Reddy, MD & COO, Dr. Reddy's Laboratories Ltd. • GK Sood, CEO, Louis Dreyfus India Pvt Ltd. • Vijay Parthasarathy, Managing Director, Gemplus India Pvt Ltd. Madhav Mehra, President, World Council for Corporate Governance, delivered the keynote, and Govind Ethiraj, Ex-Chief Corporate Editor, CNBC TV18, was the Moderator. The panel debated upon Corporate Social Responsibility, with active participation from the audience. What lingered in students’ memories long after ILS 2006 concluded, was the curious vulnerability of the elected politician, and the inspiring words of the social activist who stood up for greater youth participation in politics. In the words of Jayaprakash Narayan, “Though everybody loves to hate politics, apathy is detrimental to India’s cause. Be a part of the solution. Not a part of the problem.”
Tejendra Khanna, Chairman, Ranbaxy Laboratories Ltd., delivered the keynote address, while Rajendra S Pawar, Chairman, NIIT, moderated the discussion. Chandan Mitra was concerned about the declining number of youth (aged between 25 and 40) getting elected as MPs. The ﬁgure had declined from 162 in the 2nd Lok Sabha, to 60 in the current one. Jayaprakash Narayan said that politics, despite its disrepute, provided the only platform to the nation on which diverse and conﬂicting issues could be resolved. “The only antidote to politics is more politics, and better politics,” he said. Sandeep Dikshit gave a ﬁrst-hand account of the difﬁculties of an elected politician. He said that there were several “entry barriers” to politics, there was no deﬁned process for getting into the profession, no clear or speciﬁc path,
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India on a
High Growth Trajectory
Lloyd Blankfein, President & COO, Goldman Sachs Group Inc.
The Goldman Sachs Foundation, a global philanthropic organisation funded by The Goldman Sachs Group Inc., recently announced a grant of $1 million to the Centre for Analytical Finance (CAF) at the ISB. The funding is meant for research and faculty for CAF, to enable it to strengthen its position as the premier ﬁnance research centre in the Asia-Paciﬁc region. Lloyd C Blankfein, President and Chief Operating Ofﬁcer, The Goldman Sachs Group Inc., addressed the ISB students on the occasion. The following are excerpts from his address. “In the US, you have only two kinds of people studying law – those who want to practice law, and those who don’t know what the heck they want to do!” That was Lloyd Blankfein making light of his tryst with law before switching to the ﬁnance profession. His experience at Goldman Sachs was akin to an ageing tree. “Just as you count the rings of a tree to determine its age, you can count the crises that I’ve lived through,” he explained. Of particular mention was the traumatic upheaval of the 9/11 crisis, which he described in some detail. He summed it up in his inimitable way of simplifying the complexities of his profession, by saying, “Considering the size of the Goldman Sachs balance sheet and the size of our equity, we do live nervous lives.” Over the years, a key strength developed at Goldman Sachs was in anticipating the crises, and learning to avoid familiar ones, though they knew that they were open to new ones. India was currently a destination for direct investment by many indications, including the BRIC report, and the country was on a “high growth trajectory,” he said. Wealth-creation was “a bit like the mythological Garden of Eden – once you have tasted the fruit, it’s hard to go back.” Moreover, you could “haggle” about the “allocation of the wealth that gets created from globalisation, but nobody is haggling about whether the wealth is being created.” And what about Goldman Sachs’ presence in this Garden of Eden? Blankfein referred to Goldman Sachs’ joint venture with Kotak Mahindra, to their company’s upcoming operations in Bangalore that tapped the rich “talent pool” available in the country, and said emphatically, “We want to have an important business here in India.”
n one of the most inspiring success stories in the corporate world, Blankfein “broke free” from the “gravitational pull of law” to take up an entry-level job at Wall Street, and then work his way up to where he currently is. And the man remained modest despite the heady success, attributing it all to being in the right place at the right time. “I entered the international business just at the time that the business was internationalising,” he said.
(From the left): Professor M Rammohan Rao, Dean ISB; Lloyd Blankfein – President and COO, Goldman Sachs Group Inc.; and Professor Sankar De – Executive Director, Centre for Analytical Finance (CAF), ISB
March 2006 | ISB insight | 31
F R O M
Lloyd Blankfein, President and Chief Operating Ofﬁcer, Goldman Sachs Inc.
T H E
G U R U
for Staying Ahead in the Market
Phani Tej Adidam, Professor, Executive Management Education, Department of Marketing and Management, University of Nebraska at Omaha, spoke on Competitive Intelligence at the ISB. His talk dealt with the subject of tracking competitors’ moves in the market, anticipating their actions, and basing one’s own reactions accordingly, for a successful marketing strategy. Adidam quoted several interesting cases involving leading companies to explain how Competitive Intelligence (CI) analyses have made them what they currently are. We present excerpts form his talk. ost companies in the Indian marketplace are obsessed about their customers, but they need to focus on Competitive Intelligence (CI) as well. Predicting your competitors’ moves, six months to two years from now, calls for some sophisticated knowledge. This could be with regard to the competitors entering new markets, cutting prices, or offering new products or services on the Internet, any of which could completely undermine your existing strategy. In the ﬁfties, the three big automakers in the American market, GM, Ford and Chrysler, were selling huge cars that guzzled tonnes of petrol. But the Japanese foresaw that there would be a fuel crisis. The Japanese, considering their geography, already had small cars that were fuel efﬁcient to some extent. They now invested money in developing their distribution channels, and in fuel efﬁciency research. By 1968, Toyota, Honda, and Datsun – now Nissan – came in. The demand suddenly increased. They had a ready channel of distribution in place, as well as the right product. They were able to cater to approximately 30 – 33% of the market within four years, i.e., between 1970 and 1974. This caught the American automakers completely offguard. Their philosophy was completely product oriented, whereas the Japanese had a market oriented philosophy. That’s the kind of amazing success story that CI analyses can bring. There is also the example of Kodak and Fuji. Kodak had lost out on its ﬁlm rolls market after the arrival of the digital
camera. It had also lost about three billion dollars in law suits to Polaroid in the instant camera market, where Polaroid had several patents. But Kodak managed to gain some ground despite its losses by upstaging Fuji in gaining ﬁrst entry into the disposable camera market that’s worth around 14 - 15 billion dollars globally. Kodak’s CI regarding Fuji’s intended forays into the disposable camera business prompted Kodak to revive its own research on disposable cameras that it had shelved because it had earlier thought that the model would not sell. Thus Kodak, an American company, made headway in Japan, which was Fuji’s home country, by gaining valuable ﬁrst-mover advantage. Today, Kodak has the larger share of the market, worldwide, followed by Fuji. In the Indian context, Asian Paints has vanquished other companies in the paint industry such as ICI Dulux, Jenson and Nicholson, Berger etc., because of its strategy to allow the customer to walk into a retail outlet, and ﬁnd paint of the shade that they want, and in the size that they want. So, if you wanted a particular saffron shade in a small size, you could get it at Asian Paints, and not compromise on either the shade or the size as you would have to elsewhere. Asian Paints has gone on to build a huge customer base, and lead the market for the paint industry in India. No doubt, Asian Paints’ CI analyses made them aware of the customers’ predicament in either compromising on the shade or the size, while buying paint from a competitor’s retail outlet. There’s also this interesting case of guitar manufacturers. The world’s
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largest manufacturer of guitars is Samsung – a little known fact. Samsung are “OEM” manufacturers of guitars which are branded by others. There were three other guitar manufacturers in the US who were affected by Samsung’s lower pricing strategy. Samsung’s CI analysis forecast the Guitars Manufacturers Association of America (GMAA) going to the International Trade Commission to seek relief from high tariffs. This protection would, no doubt, undermine Samsung’s pricing strategy. But Samsung dealt with it by importing huge stocks of guitars from Korea and elsewhere to last three years of sales just before tariffs were slapped. The revised tariff would have had Samsung’s costs go up by 17%. But Samsung’s forethought of importing huge stocks at the old tariff ensured that it suffered only a marginal 2% hike in its pricing. Samsung continued to sell guitars at its original rate for the next two years, and the competitors did not gain from the protection accorded by the Trade Commission. The tariffs were eventually withdrawn in just two years as against the usual three years. This was thus a case of pre-empting a competitor’s moves through successful CI. INTEL is a company that encourages almost every employee to be a CI specialist. What it means to be an INTEL employee is that you would have to read all the journals, and news in the media relating to the semi-conductor industry. You are expected to clip it, scan it, and then send it to their centralised database. Most of the familiar names in the industry, invariably keep repeating in their database
at regular intervals, but INTEL focuses more on those unknown companies that pop up once in a while. This is done with a view to track new technology. To be more speciﬁc, there was a company in Taiwan that kept popping up on the database about once in six months. After seeing the pattern for some time, INTEL sent a team to Taiwan and found out that the company had a small research lab, and had done tremendous research in their area, and was seeking additional funding. They were actually trying to patent some of the technology that they had developed in the area of semi-conductor dust. INTEL inked a contract that bought 48 – 49 patents from the small company’s lab in the year 2002. Five out of these patents have already given INTEL approximately 1.8 billion dollars in revenue. Thus, CI can also lead to the discovery of potential competitors that are on the periphery of the industry, trying to come in, and that could, perhaps, give you a lot of trouble in the future after they have actually managed to get in. Competitive Intelligence as a subject, does not receive as mush focus as it should in India. It is not yet a subject of study even in major B-Schools across the country, leave alone being a subject that attracts research. Though it is practiced loosely at various levels, it is not approached as a subject deserving systematic study. Clearly, it deserves more focus, as it is crucial for crafting existing marketing strategies to emerge successful in the marketplace when launching new products, or when entering new markets.
March 2006 | ISB insight | 33
Speakers at the CAF-SCID Conference
The Current Status of
Indian Economic Sector Reforms
The Stanford Center for International Development (SCID) recently invited the Centre for Analytical Finance (CAF), ISB, to be its partner in organising the economic sector reform part of its famous semi-annual conferences on India. Typically, SCID organises one such conference in the summer at Stanford, and the other in the winter in India. This year, the economic sector session of the winter conference was jointly hosted by CAF and SCID, in collaboration with Satyam Ltd, and with funding support from Karvy Consultants. s the glass half full or half empty with regard to the current status of the Indian economic sector reforms? With six eminent speakers presenting their respective expert opinions at the recent CAF-SCID Joint Conference on “Indian Economic Sector Reforms: Current Status”, there was ample food for thought for the audience. The proceedings began with T N Srinivasan, Senior Fellow, Stanford Center for International Development (SCID), and Samuel C Park Jr. Professor of Economics, Yale University, making his presentation – Status of Indian Economic Reforms: A Hiatus or a Pause before Acceleration? He agreed that India was presently in an enviable position among developing countries owing to its growth rate. But he was critical about the lack of effort in sustaining the momentum of growth achieved in the initial postreform years, when growth rate peaked at 7.8 % – a record yet to be regained. The banking sector came in for some praise by Srinivasan, with initiatives such as introduction of prudential measures, greater competition to public sector banks, deregulation of interest rates, delivery versus payment system etc. Other praiseworthy achievements mentioned
were improvements in the government securities market in terms of market size, lower yields, and longer maturities and trade volumes. Despite these achievements, the mechanisms for risk assessment and management in banks have not yet achieved global standards. According to him, “India’s is a Good News and a Bad News story. In terms of growing from where we once were, we have Good News. But in comparison to what we could have been, and particularly in comparison to the achievements of countries like China, we have Bad News.” He concluded that the reforms process had either stalled, or was crawling since the 1990s, and an acceleration of the process was absolutely essential. He questioned both the direction of policy and the efﬁciency of implementation in the reforms process. Rakesh Mohan, Deputy Governor, Reserve Bank of India (RBI), stoically defended the reforms process. Regardless of any perceived lapse in policy or in implementation, he maintained that “India is on the move.” He quoted statistics of 40% plus corporate proﬁt after tax for eleven quarters, the success of Value Added Tax (VAT) and the growing number of states that have accepted it, the growing rates of savings in both household and
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corporate sectors, and even the addition of 2 - 3 million cell phone users each month as indicators of the buoyancy of the Indian economy. He also noted, with pride, that while there had been banking sector collapses in about a hundred countries around the world, the Indian banking sector continues to remain stable. This must, to a large extent, be attributed to our more efﬁcient use of resources compared to several other growing economies. He acknowledged that there had been slowdowns in the growth rate both in 1997 and in 2000, but the major resurgence after 2002 had been making up for the earlier slowdown. S Narayan, former Economic Advisor to the Prime Minister of India and former Finance Secretary, Government of India, decided to tread the middle path by focusing on the government’s perspective on reforms. He highlighted the fact that the entire world was now looking towards India for trade opportunities. He quoted the crossing of the $100 billion mark in exports, and the recruitment of 5,00,000 people in the IT sector in the city of Chennai alone, as landmark achievements. The problems, he felt, were in the implementation of policy. Several policies such as the ones relating to development of infrastructure, for instance, were formulated quite some time back, but had not yet seen implementation. “We have run out of the easier things to do. We now need to work on the more difﬁcult ones,” he said. G N Bajpai, former Chairman of Securities and Exchange Board of India (SEBI) and former Chairman, LIC, felt that the regulatory structure of capital markets was fragmented. India’s implementation of accounting policies, disclosure standards,
and corporate governance practices would enable India gain recognition as a success story on a global scale. Shubhashis Gangopadhyay, Founder-Director of India Development Foundation (IDF), focused on the need to develop the commodity futures market, which had the potential to be a USD 600 billion market. Sankar De, Executive Director, Centre for Analytical Finance (CAF), ISB, presented a detailed paper on the impact of reforms on corporate sector ﬁnancing. He also moderated the panel discussion that followed the individual speeches. The panel discussion saw some enthusiastic participation from the audience, which was a reﬂection of the overall success of the conference in providing some interesting perspectives to the assessment of the current status on India’s economic reforms. And the conclusion? Whether half full, or half empty, the fact remains that India has just about reached the half-way mark in the economic sector reforms.
T N Srinivasan, Senior Fellow, Stanford Center for International Development (SCID); and Samuel C Park Jr. Professor of Economics, Yale University
T N Srinivasan Rakesh Mohan S Narayan G N Bajpai Shubhashis Gangopadhyay Sankar De
Semi-annual update on state of reforms Comment on semi-annual update by TNS Government’s perspective on reform Capital markets reform Commodities and derivatives markets reform Impact on reform on corporate sector ﬁnancing
March 2006 | ISB insight | 35
C E N T R E
F O R
A N A L Y T I C A L
“India’s is a Good News and a Bad News story. In terms of growing from where we once were, we have Good News. But in comparison to what we could have been, and particularly in comparison to the achievements of countries like China, we have Bad News.”
F I N A N C E
I E N T E R P R E N E U R S H I P
Social Ventures that Look Beyond the Bottom Line
The Wadhwani Centre for Entrepreneurship Development (WCED) at the ISB recently hosted the ﬁrst-ever Asia Semi Final of the prestigious Global Social Venture Competition (GSVC). Sixteen teams were shortlisted from among 66 Asian registrations after a preliminary evaluation by the judges. At the Semi Finals, ten of these teams were selected to go through to the next round of the competition by a distinguished panel of judges. ara Olsen was packing to leave after her extended weekend stay at the ISB in her capacity as a judge at the Global Social Venture Competition (GSVC). She had been a participant at the GSVC ever since its launch, and had obviously enjoyed the opportunity of judging the creativity of social ventures from young businessmen and businesswomen. The ISB had hosted the Asia Semi Finals of the GSVC in keeping with its responsibility as GSVC’s International Afﬁliate. The Wadhwani Centre for Entrepreneurship Development (WCED) at the ISB promoted the competition in all the Asian countries such as the Philippines, Hong Kong, China, Australia, Thailand, and India, in the run-up to the event. The event had interesting sidelights to it such as a handicrafts exhibition and sale, a welcome function, and a cultural programme organised by the Spouses and Families Association (SFA), of the ISB, all of which Sara had thoroughly enjoyed in the company of the other judges – Kim Alter (Virtue Ventures), Alice Lin (IFC, Washinton), Lakshmi Venkatesan (BYST), Professor K Ramachandran (ISB), and Professor V Chandrasekar (ISB). The GSVC was started in 1999 as a student-led initiative by Sara Olsen, who was a Haas student at that time, along with four others. The partners who now run GSVC are the Haas School of Business, the Columbia Business School, the London Business School, and the Goldman Sachs Foundation. The competition aims to provide a global forum for entrepreneurs
to showcase their business plans, and for investors to support groundbreaking social ventures. After graduating from Haas, Sara launched her own company, SVT Consulting, to help companies evaluate and quantify their environmental and social impacts. Did she think that the idealism embodied by “socially responsible businesses” get somewhat diluted as one graduates from being a student, and moves on to more “tangible businesses”? “No, of course not,” she said. “Personally, I have remained very much committed about ventures that make money for their investors, while providing tangible social beneﬁts.” One criterion for entry in the competition is that each team have at least one actively participating MBA student. Some of the participating teams the world over are already in business, and seek expansion capital; others exist only on paper. “So, often, there is a mix of experience and idealism,” remarked Sara. Of the ten teams selected to go to the next level of the Global Semi Final, four were from the ISB, one each from S P Jain, MDI, IIM-Indore, Asian Institute of Management – Manila, De La Salle University – Manila, and Mahidol University – Bangkok. The projects were evaluated based on two important criteria: • Clear and quantiﬁable social objectives and impact • Financial sustainability, i.e., being proﬁtable and self-supporting through revenue generation
36 | ISB insight | March 2006
“Personally, I have remained very much committed about ventures that make money for their investors, while providing tangible social beneﬁts.”
Professor V Chandrasekar, Executive Director WCED summed up the selection as: “We want to create a new generation of social entrepreneurs. We want these chosen leaders to understand that a social enterprise can beneﬁt society, and be professionally and personally rewarding as well.” The plans developed by the selected teams addressed rural electriﬁcation, the use of ICT to empower rural Indians, services to MFIs, empowerment of handicraft artisans, a TV channel for differently abled persons, electronic waste management, and setting up a knowledge network to help farmers. The WCED at the ISB carried forward its responsibility by providing mentoring support to the selected 10 teams to prepare them for the Global Semi Final. The WCED’s mentoring effort has earned rich rewards, as a team from the ISB – Annie Mathew (ISB Class of 2006), Charan Chintakandi (ISB Class of 2005), and Ravi Kumar (non-student partner from Satyam) – has made it to the GSVC ﬁnals scheduled at Columbia Business School on April 6, 2006. In fact, of the nine ﬁnalists, three came through the Asian Semi Finals held at the ISB. The three teams to make it to the ﬁnals – ISB, IIM (Indore), and Mahidol University (Bangkok) – were all mentored by the specialist team at the WCED. In her experience as a judge at the GSVC, Sara saw a wide variety of Bplans developed by teams from various countries across the world. Surprisingly, she found that the issues addressed
by these varied B-plans that panned countries and even continents, had a lot in common. “I find that the plans address much the same kind of opportunities and problems. The problems may var y in severity, but the nature of the problems addressed remains ver y much the same all across the globe,” she said. At the GSVC, these plans are assessed for a quantifiable social return on investment with the aim of getting the maximum social and environmental bang for the buck, i.e., measurable public benefits in financial terms. It is this innovative aspect of the competition that sets it apart from other B-plan competitions, which focus solely on maximising ﬁnancial return. The GSVC’s encouragement for ventures that address
the ﬁnancial, social, and environmental bottom lines, is part of a growing trend of a few other similar initiatives that combine mission with strategy for the new breed of social entrepreneurs. Initiatives such as the Net Impact – a network of MBA students and professionals committed to using the power of business to create a better world, and World Resources Institute (WRI)’s Beyond Grey Pinstripes – a guide to environmentally and socially progressive B-Schools are pointers towards this growing trend. “Non-proﬁt” and “philanthropy” are terms that now seem almost passé. What currently excites B-School academicians is ﬁnding innovative entrepreneurial solutions to social problems. A welcome trend, by all means.
Asia Semi Finalists at the GSVC
March 2006 | ISB insight | 37
I E N T E R P R E N E U R S H I P
I N T E R V I E W
Interview with Professor Hayagreeva Rao
French gastronomy during the period 1970 – 1997, when classical and nouvelle cuisines were rival categories competing for the allegiance of chefs, is the research setting for Professor Hayagreeva (Huggy) Rao’s recent work. The paper – Border Crossing: Bricolage and the Erosion of Categorical Boundaries in French Gastronomy, is co-authored with Philippe Monin and Rodolphe Durand, and has been published in the American Sociological Review. Bharanidharan, Praveen Gonabal, and Ravi Viswanathan from the Class of 2006, talk to the Professor on the interesting implications of his research, and other equally interesting topics. Professor Hayagreeva Rao is a member of the Faculty Advisory Board (FAB) on Organisational Behaviour at the ISB, and Professor of Organisational Behaviour at Stanford Graduate School of Business. He has published widely on the subject of social and cultural causes of organisational change. The students caught up with him at an Executive Education Programme at the ISB. Your research on French gastronomy deals with the erosion of categorical boundaries, resulting in new styles from the blurring of boundaries. Can we see examples of these in today’s organisational structures? In the global and multicultural contexts, can we see western companies emulating Japanese practices, or Indian companies emulating western ones? We can certainly see that. I like to study categories – in markets and in professions. I choose research settings that everybody can easily identify with and relate to, such as food. The issue of categories – how they are created, and how they combine – happens in markets and in organisations. I showed how it happened in the French gastronomical market. You could also consider other areas such as machinima, where animation and computer game-based techniques are combined to make ﬁlms. You see game developers using animation technologies for making ﬁlms, that’s the ﬁlm world’s equivalent of blogs. So, the deﬁnition of what’s a game, animation, or ﬁlm – assumes blurred boundaries. A similar kind of blurring is happening in organisations, though not just in western or eastern companies. Let me give you a quick example. Infosys is thought of as an Indian company. But they are hiring a lot of people in the US markets. So, does that make it a North American company? I am not suggesting that boundaries are going to go away. They are going to erode under certain conditions, and all of this has interesting implications. For example, under what conditions is it better for ﬁrms to be able to offer products that straddle two categories? Is a bike, which is actually a combination of a cruiser and a road bike, better than a bike that exclusively belongs to only one of those categories, especially if the combination bike is offered at the same price point as the individual ones? Will you lose out on purists by straddling categories? You will, in some instances. For instance, the micro brewing industry rose as a reaction to the big industrial breweries. The industrial beer guys thought they should straddle, and introduced microbrew like products. The micro brewery guys policed that, and called the new products fake. The boundary problem is
The Erosion of
F A C U L T Y
Ravi Viswanathan, Bharanidharan and Pravin Gonabal from the Class of 2006
38 | ISB insight | March 2006
Is it possible that the hitherto trend-setting organisations around the world are under pressure to constantly innovate, regardless of whether the innovation is really needed, just to maintain their status? Do you think that this could be causing wasteful or gratuitous innovations? What you are asking is, do ﬁrms engage in cosmetic innovations? The answer is somewhat complicated. Hospitals engage in “prestige competitions” wherein if one hospital bought a big machine that does CAT scan, the other also gets one. But does the neighbourhood need both? It’s not clear that “prestige competition” is a good idea. In the case of companies like Apple, they are not only under pressure to innovate, but also to be the best, which is altogether different, because they are not going to have innovation for the sake of innovation. I would be mischievous enough to suggest that the problem you are alluding to, is most visible in the area of B-School rankings. The rankings give you some information, but not a whole lot. They are noisy, but nevertheless, they compel schools to allocate resources towards a lot of cosmetic innovations. B-Schools could go to ridiculous lengths to earn points for their rankings. India and Indian businesses are getting a lot of positive attention in the global media. What opportunities does this prominence present to Indian companies, and to India? In many ways, the impact is enormous. For instance, it is reﬂected in the growing number of Stanford students who want to come to India for internships. And that’s part of a blurring – the beginning of a process. Indian companies – especially in software and biosciences – are being recognised as power houses, while the others are also establishing themselves. These are actually world class organisations, so the opportunities are many. The challenge now is to go global.
How are organisational structures around the world changing with increasing globalisation? We are already beginning to see the outlines of the future organisations. They are virtual, geographically dispersed, multicultural, ﬂat, and they constantly reassemble. It’s really not the structure that you worry about, but the culture and the attitudes. Structures are going to change fast; they are going to be cellular, and have networks. You are already seeing a lot of this. The relationship between an organisation and its workers is changing fast. People now freelance for organisations, and they move between organisations. Technology is enabling people to network very widely. Does this affect the relationship between the organisation and the workforce? Deﬁnitely. The entire nature of the employee-employer contract has changed. You can see the controversy on pensions – pretty soon this is going to become a hot political issue, at least in the United States. In general, people see themselves as a free agent in an economic system. You reap the fruits of what you sow. If you don’t develop long term relationships with your employees, you’re going to have lots of free agents, and that’s going to make organisations a lot more complicated. Attrition is a huge problem. Martin Kenny and Raﬁq Dossani have written a book on Indian outsourcing entities. One of the things they say is that these entities are going to be out of business soon, one good reason being the inability to recoup training costs. Sometimes, I wonder if whether what is needed is more downsizing and right sizing, particularly in the senior levels of the organisation, than in the operating core.
Professor Hayagreeva Rao – Member, Faculty Advisory Board (FAB), ISB, and Professor of Organisatonal Behaviour, Stanford Graduate School of Business
“I am not suggesting that boundaries are going to go away. They are going to erode under certain conditions, and all of this has interesting implications.”
March 2006 | ISB insight | 39
F A C U L T Y
I N T E R V I E W
fascinating in many other instances. You can see it in companies like Sony and Apple – how they are all blurring boundaries between product categories. The cell phone that combines camera and phone functions is an example.
Can Indian companies capitalise on this prominence, and gain a competitive advantage in driving others to emulate them? Visibility makes you a role model. The interesting question is – what sort of companies will imitate Indian companies, and what sort of companies will outmanoeuvre the Indian companies. Prominence is a double-edged sword; you get the beneﬁts, but you will also have your share of bad news.
A L U M N I
My Journey with the ISB
Aarthi Ramesh, Class of 2003, is a young achiever. She was one of the toppers in her class, and is currently working with Cognizant Technology Systems, Chennai. In the following article, she talks about the special bond that she shares with the ISB. “Ten years from now, you will be more disappointed by the things that you didn’t do, than by the ones you did do. So throw off your bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” – Mark Twain his was the quote that set me off from a technical job in the US to pursue my dream of becoming a business graduate from the Indian School of Business. Six years of experience in the IT industry, and a chance of a lifetime to witness the crest and the trough of the IT business cycle from close quarters in 2000-2001, had increased my desire to learn the business side of the industry. ISB, with its world-class faculty, students with work experience and diverse proﬁles, and an international business programme at Indian costs, attracted me and lured me back to school. ISB provided me with the right intellectual meat that I was craving for – the varied subjects, enthusiastic and helpful professors, diverse study group, lively class atmosphere, case studies and exams – all thoroughly captivated me. I spent most of the days engaged in long hours of debate over cases, solving problems with study groups or seeking clariﬁcations from faculty members who untiringly spent as much time as possible with students. In retrospect, the best learning for me has been looking at the overall perspective of an issue, identifying multiple solutions, providing frameworks to ambiguous situations, developing and tapping networks, honing risk taking ability, and discovering an increasing appetite to take on unconventional roles and activities. Competing with the crème-de-la-crème, and graduating with top honors, has also given me the conﬁdence to face high pressure situations, and the tenacity to persist and emerge victorious. Learning time management skills has been another essential value learnt at the ISB, which is necessary to balance work and life, especially when there is a two-year old at home to take care of. The alumni network and deep friendships made at the ISB have always been a source of major support. Any call for help is answered promptly, and the professors also respond to emails immediately in spite of their heavy schedules. The faculty encourages the students’ academic appetite, and this has motivated me to apply for a Ph.D. programme in top US schools.
Aarthi Ramesh, Class of 2003
40 | ISB insight | March 2006
The gathering at Solstice
Getting through doctorate programmes in one of the world’s best universities, would not have been possible without the help of the ISB professors, who are themselves acknowledged as the best in their ﬁelds. A strong sense of belonging is what the ISB provides, and there is warm bonhomie whenever we get to meet a student from the ISB, or when we get to hear any news about the ISB. There is so much pride in seeing achievements coming forth from the ISB family, and personally for me, it has been an endeavour to do whatever I can to help towards the growth of the institution – participating in road-shows, conducting interviews, helping in building the ISB brand among undergraduate institutions, providing guidance to students applying to the ISB programme, providing career guidance to the latter batches at the ISB, and championing the ISB brand in my current organisation. The alumni chapters in each of the regions also help a lot in meeting up with the alumni, and are times for reminiscing about ISB and meeting the new additions to the growing ISB family. Belonging to the second batch of the ISB has also given me the chance to build some of the traditions and practices, as part of the co-curricular activities – be it the starting of a new club, deciding on the lunch menu, or even celebrating functions. There is a great sense of pride and happiness in hearing that these little traditions are being followed even now by the current batch of students. My journey with the ISB is not over. In some ways, it is still the beginning, and I personally believe that I stand to gain a lot from the institution, and hope to contribute whatever I can in making the institution a great place for learning and growth.
the Annual Alumni Reunion
The ISB community hosts its alums every year at a grand gettogether called Solstice. The strong bond that the School shares with its alumni is on ample display at the reunion, which always attracts a good turnout. Solstice this year had much in store in the form of entertainment and learning experiences. For the entertainment, there was a theme party “Arabian Nights” replete with mashaals, hookahs, and sheikh attires. The Class of 2006 toasted the alums with scintillating cultural programmes specially organised for the occasion, and a carnival that had game and food stalls, performances organised by the Net Impact Club, a quiz show, and several solo performances. Besides the merriment, there were interactive sessions between the alumni and the current students, which had placement related advice being shared, and also experiences of life after graduating from the ISB. The grand ﬁnale of Solstice was the energetic performance by Bhangra Knights, a rock band, which had the crowd dancing to several foot-tapping numbers. For several alums, retaining contact with the ISB is of great importance. Many of them work to give back something to the School from which they have gained valuable takeaways. Arjun Srinivasan, President, Alumni Association, in his address, shared some of the future plans of the Association in investing corpus in equities, and offering scholarships to needy students from the alumni corpus fund. For others, like Kanishka Sinha, Class of 2003, the event was an occasion to renew the strong bonds that the alumni share with the School. “I missed coming to Solstice last year, and coming back this year has reinforced how much the ISB means to me, and reminded me not to neglect the things that are important,” he said.
March 2006 | ISB insight | 41
TGIF Talk on Global Media Expansion Elfriede Fursich, Associate Professor of Communication at the Boston College, spoke on “Desperate Housewives Meets Arranged Marriages: Are Foreign Media Corrupting Indian Culture?” at a talk organised by The Global Institute Forum (TGIF) of the ISB. She focused on the various problems and challenges pertaining to media globalisation, and dispelled some of the commonest assumptions about broadcasting. The TGIF meets on the ﬁrst Friday of every month to discuss topics of interest and relevance to our community, our country, and our world. CAF Annual Winter Conference The Centre for Analytical Finance (CAF) hosted scholars from the US, Europe, South-East Asia, and India, at its annual Winter Research Conference. The scholars presented their research papers, and discussed the conference proceedings. Lohri – The Festival of Joy Lohri was celebrated on campus with joy and exuberance. The Spouses and Families Association (SFA) pitched in with mouthwatering food, and arranged for a huge bonﬁre around which everyone danced to the rhythmic folk beats of a dhol. The atmosphere was pleasantly rustic indeed, and very heart-warming.
E V E N T S
ISB Participates in Pravasi Bharatiya Divas 2006 The PBD is an event that attracts the Indian Diaspora from across the globe. The ISB, which shares a close bond with the NRI community, was proud to be a happy participant this year. The campus hosted a group of 29 youth interns, besides putting up a stall at the PBD venue. WCED Annual Business Plan Competition The Wadhwani Centre for Entrepreneurship Development (WCED) and the Entrepreneurship and Venture Capital Club (EVC) of the ISB conducted their Annual Business Plan Competition. Nitin Vyakaranam won the ﬁrst prize with “Spirit Networks”. Apart from winning the trophy, the winner represents the ISB at the Asia Moot Corp ’06, and at the Bangkok Business Challenge.
42 | ISB insight | March 2006
Sunethra - Music Concert by Physically and Mentally Challenged Children As part of the alumni reunion celebrations “Solstice”, the Net Impact Club at the ISB held a special music concert by the hearing impaired, visually and mentally challenged children in an effort to raise awareness and funds to build school and hostel facilities for the children of Sunethra, a school for the blind. The endearing entertainment display by these differently-abled children ended up being the scene-stealer at “Solstice”.
Montek Singh Ahluwalia’s Visit The Deputy Chairman of the Planning Commission visited the ISB recently. He was in the city in connection with the Pravasi Bharatiya Divas (PBD), and appreciated the research activities undertaken by the ISB. The campus attracted several other dignitaries, including ministers and ofﬁcials, who were also participating at the PBD, and took the time out to visit the ISB.
ISB’s Multi-Event Student Festival
Students Bag B-Plan Contests Chandrashekhar Vattikuti bagged the ﬁrst prize with “Chitraksh” at Anveshan– BPLANZ, the annual business plan competition of IIM–Ahmedabad. The Center for Innovation, Incubation and Entrepreneurship (CIIE) was so impressed with another ISB entry “Comfort Controls”, conceived by Kabir Singh that they offered to incubate it. Neeraj Khemka was part of the winning team – “Altech” at the IIMKozhikode competition, Idea 2006. Malini Alles: Venture Capitalist and Social Activist Malini Alles, the Silicon Valley venture capitalist and social activist, interacted with the ISBians, and shared her plans for her recently launched real estate fund. “Maia”, the $100 million real estate fund, is to invest in industrial, commercial and residential development and re-developmental projects in India in the next few years.
Christmas Celebrations The ISB community celebrated Christmas with good cheer and merriment. They sang carols, and decorated the Christmas tree. The children on campus pitched in with a specially orchestrated Nativity Play, and Santa Claus ensured that they were all duly rewarded for their efforts.
With classical Greek names to events to connote an aura of adventure, challenge, and excitement, Poseidon 2005 – the two-day multi-event student festival of the ISB, succeeded in living up to its expectations. The festival attracted over 250 guest participants from the ﬁnest Bschools across India who competed for one-upmanship in events that ranged from the mandatory debates and quizzes to the more innovative events. These events induced participants and audiences alike to test their mettle in ﬁelds such as Marketing, Consulting, Information Technology, Entrepreneurship, and Finance. And there were the “fun” events too that ensured all-round participation from enthusiastic young men and women “chilling out” before getting back to the rigour of academic study. Some of the popular events were Olympieia – a technology innovation challenge that had competitors prepare short B-plans on technology related ideas, Cerebrum – a test on the contestant’s problemsolving skills, Drachma – an equity research report presentation, Eureqa – an online thematic quiz, Tempest – an evaluation of the competitor’s analysis of an entrepreneurship case, Rhetorium – the ISB debate on a given topic regarding entrepreneurship, Kryptos – a test of the competitors’ advertisement interpretation skills, Negotiatus – a client interview contest, Energeia – a case study competition with the topic concerning the current energy scenario in India, Pegasus – a contest on presentations on Emerging Markets, Symposium – a live marketing case study contest, and many more. Elysium – a fashion show with the theme “The Five Elements of Nature”, and Octavia – a music competition, saw huge audience turnout with loud and wholehearted cheering for the participants. The festival culminated in a grand ﬁnale – a Greek theme-based party that had some of the party-goers dressed in Greek period costumes to add to the ambience. In the end, Poseidon went down everyone’s memory as a memorable event. “A very well organised event – one of the best among B-school festivals,” concluded Adarsh R of IIM-Calcutta, a participant.
March 2006 | ISB insight | 43
The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century by Vijay Mahajan and Kamini Banga Publishers: Wharton School Publishing. Copyright © 2006 Pearson Education, Inc. According to Rajat Gupta, Senior Partner worldwide, McKinsey and Company, and Chairman of the Board of the Indian School of Business, “This book demonstrates that the dramatic differences of emerging markets create tremendous opportunities. The authors present powerful solutions for unlocking these opportunities. The 86 Percent Solution is a wake-up call for any company, consultant, or educational institution that has not given these markets sufﬁcient attention in the past. And it can serve as a rich guidebook for those who want to understand and grow their businesses in the 86 percent world.” The book has been widely reviewed for its ability to appeal to managers trying to expand market reach in developing countries who want to think differently about strategies that may succeed in their own environment. Reviewer Craig L Howe has this to say about the book in www.amazon.com: “For years the developed world has been viewed as the “mother lode” for worldwide business. Companies poured their resources into serving the 14 per cent of the world’s population that is fortunate enough to live there. According to the authors, Vijay Mahajan, former Dean of the Indian School of Business and current holder of the Harbin Centennial Chair in Business at the University of Texas in Austin, and Kamini Banga, an independent marketing consultant, these markets are oversaturated, over-competitive and aging. The growth, they argue, lies in reaching the rest of the world. Focusing on the 86 percent of the world with a per capital gross national product of less than $10,000 year offers a rich opportunity. These markets have been largely invisible to worldwide companies and even some ﬁrms operating there. Yes, the authors acknowledge, these countries lack infrastructure and media. They have low literacy rates. Their consumers react in unconventional ways. Yet with the right solutions, these markets represent staggering opportunities.” The authors draw on several case studies from emerging markets to demonstrate actionable strategies and tactics for product design, pricing, packaging, distribution, branding, advertising, and much more. The 86 Percent Solution is a book that is likely to beneﬁt leaders of governments, non-governmental organisations, and other organisations who want to better understand the complexities of the developing world’s business environment. The book’s concluding paragraph, sums up its message: “The transformation is just beginning. There will be hiccups along the way and further surprises over the next two decades as the next “Chinas” and “Indias” emerge. The only certainty is that 86 percent markets are here to stay. These markets are young and growing. Even though they won’t become developed tomorrow, they are the future. And the companies that can develop the right solutions to meet their needs will ﬁnd a rich source of growth.”
44 | ISB insight | March 2006
If you want to learn driving, learn from M.Schumacher
The Indian School of Business (ISB) gives you that extra edge to stay relevant in a changing world. By bringing you world-class faculty - experts with numerous intellectual innovations that fuel business growth in their respective fields. Each one has a proven track record that reflects the leadership of a Michael Schumacher. With its international perspective, research based approach, and renowned faculty from internationally acclaimed B-Schools, the ISB offers you a host of Executive Education Programmes.
May – July, 2006
Accelerated Management Programme Faculty: Ananth Iyer – Purdue; Atul Nerkar – University of North Carolina; Don Sexton – Columbia; Suren Mansingka – University of California, Berkeley; Prabha Sinha – Visiting Faculty at Kellogg May 18 – June 02, 2006 Course fee: INR 2,98,000 Building and Managing Brands Faculty: Don Sexton – Columbia May 25 – 28, 2006 Course fee: INR 75,000 Accelerating Sales Force Performance Faculty: Prabha Sinha – Visiting Faculty at Kellogg May 28 – June 01, 2006 Course fee: INR 1,25,000 Marketing Strategies in Competitive Environment Faculty: Dipak Jain - Kellogg Jagmohan Raju - Wharton June 28 – July 01, 2006 Course fee: INR 1,50,000 Coaching Programmes for Top Management Faculty: David Pendleton - Visiting Faculty at Oxford July 10 – 12, 2006 Course fee: INR 75,000 Financial Strategies for Creating Value Faculty: Bhagwan Chowdhry - UCLA Suren Mansingka - University of California, Berkeley July 19 – 23, 2006 Course fee: INR 1,25,000 Global Manufacturing Excellence Faculty: N Viswanadham - ISB July 20 – 23, 2006 Course fee: INR 1,00,000
BE A WINNER
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