Category Archives: Strategy

Options to the real estate industry

The real estate industry in India is facing an uphill challenge. Last 5-6 years have seen an unprecedented rise in rates of real estate all across India. The rise is really phenomenal as it is beyond any logic that market experts could attribute it to.

But, now it seems the rally has stopped. The rise has stalled for the time being. But, the recent hike in the sale prices in real estate has resulted into a corresponding rise in the input and interest costs. So, even though the prices are unaffordable, they are not coming down. The developers of the real estate industry can’t sell at lower rates and can’t bear the burden of the unsold inventory also.

So what is the solution?

In marketing terms,there is a NEED for the accommodation, for the real estate. But this need is not resulting into sales, because the price is not affordable to the customer.  How to bridge this gap?

1) If we observe recent trends, there is a lot of mobility in people’s careers. More people are shifting bases rapidly, jumping from one job to another, from one city to another. The demand-supply equation of the job market is prompting people to stay at a city for few years and then move to another city. A large number of these people are youngsters, who are not yet married and are open to change cities for few years. But, each time they shift to a new city, they have to pass through a lot of hassles of finding and settling into a new house.

2) There is a huge movement of marketing/sales/support people across the country for shorter periods at various cities and towns. They face difficulty in finding decent accommodation, because hotels are prohibitively expensive and the low-end options are unacceptably lower in quality. Admin departments of companies are always hard pressed to find good temporary staying solutions for their touring staff members.

Such types of movements of people from one place to another can be supported and exploited commercially by real estate developers.

For that, they need to look at little ahead in their value chain. They need to develop real estate management organization and provide managed, furnished, shared or independent decent and affordable paying guest type of accommodations to individuals, families or companies for various types of time periods.

In short, there is a huge demand for managed, rental accommodations which do not have troubles associated with Leasing or renting Leave & License accommodations and are affordable below the hotels. Also, if such housing options are available across major cities, companies will be interested in booking accommodations for their touring manpower. They will get same standardized quality across various cities.

In today’s changing India, temporary ownership is becoming popular. Customers are not averse to paying for using something of good quality. This way, even if they can’t buy it, they can avail of good quality product or service. And the real estate developers can get better returns on their investment, while still holding the ownership of the property and earning its appreciation.

Just like radio cabs pooled together many assorted transporting vehicles, it will be pertinent if real estate developers and investors look into similar options for accommodation.

How to select a business consultant?

In Gujarati, there is one beautiful line written by Shri Gunvant Shah, which says something to the effect : “A boy fell in love with a girl’s beautiful eyes and then made a mistake to marry her whole body…!”.

In selecting business consultants, many businessmen make such mistakes just like that enamoured boy who could not see anything beyond the beautiful eyes. They go to a seminar, listen some passionate, well-rehearsed speech and they get so impressed by that speaker, that they bring him/her in as a consultant in the company, without really checking the credential or capability of that person as a consultant.

Good consultants are needed for any company. A good consultant can be a great source of guidance, expertise and advice. He/She can bring in an independent perspective, which the insiders cannot see perhaps because of the bias which comes along with being within the business. A consultant can provide a ‘third-eye’, an independent view of the business’ realities. But the selection of a business consultant requires careful examination.

Here are some guidelines to help entrepreneurs check in prospective consultants. I begin with some pitfalls to avoid :

No business experience:

Many consultants have no real business experience. They have been teachers, speakers or trainers during their whole career. They have learnt and taught many theories, but not really ‘run’ any business. They have not made any mistakes. They have not failed or succeeded in any business. They have only delivered passionate speeches and trained people in how to do business…!  They have got experience only in Doosre ke kandhe pe bandook rakh ke fodna…

What dependable advice can anybody give where he himself has not succeeded or failed doing anything? The distance between management colleges and corporate offices has to be walked on the path of real work experience, which does not come by simply reading Harvard Business Review or Tom Peters.

Name-Throwing :

A certain class of solo consultant have a habit of throwing big names. I have come across a big number of ‘name-throwing’ consultants who have

  • ‘Worked’ with Tata, Birla, Reliance etc. group companies.
  • ‘Guided’ so and so MNCs.
  • ‘Managed’ 80,000 crores of business of their consulting clients. (Whatever ‘managing’ means here…)
  • ‘Transformed’ the organizations.
  • ‘Built’ the brand ‘xyz’ of so-and-so company.
  • ‘Turned around’ the sick company.

Remember, One can also enlist ABC Tata Company as a ‘client’ by giving one hour lecture to their watchmen or drivers on how to open/close doors to visitors. This can be useful only if you need the consultant to train your watchmen/drivers.

Arrogance:

The business consultant as a breed is losing its respect due to some irresponsible elements who hide their ignorance and intellectual handicap behind a facade of rudeness and arrogance.These people operate from the safe cocoon of the boss client’s cabin. Once out of that shell, they stand vulnerable and exposed. They pretend that their arrogance is the manifestation of their supreme confidence. No businessperson should allow his employees being treated badly by any outsider while at work. If a consultant does that, he should be shown the door as his value system lacks individual respectability.

Management jargon :

A crop of wannabe consultants read latest management magazines and books and come to the clients’ office spitting out this valuable ‘gyaan’ to gullible, impressionable, unsuspecting entrepreneurs, who, in their enthusiasm to build big business, catch every word oozing out from the consultant’s mouth as sacred and give orders to their subordinates to implement the same immediately. Next time, when the consultant visits again, he has read some other article, so he gives some different gyaan, completely forgetting that previously his victims have been enlightened by his respectable self by some different management fad  (which was never tested for suitability to the client’s situation, nevertheless…).

Level of Honesty :

All that the consultant is going to charge must be clarified in black and white. If the consultant shows tendency to make some fast buck on unclarified or undecided matters, that shows his level of honesty.

Accountability:

The tenure and the expected outcome of the consultant’s assignment must be clearly spelled out in the beginning. The performance must be reviewed regularly.  The major part of the consultant’s remuneration must be linked with the outcome he is brought in for. He should be confident about his contribution and if it does not work, he must be ready to share the risk, by linking his remuneration to the results.

In a nutshell :

1) Hire a business consultant only if he can add value. Today it is fashionable to say “We have a consultant.” Don’t fall prey to fads.

2) Check out for the performance of the businesses the consultant has worked with. If possible, ask for the reference and check it sincerely. It is tempting to get carried away by ‘our reputed client lists’. How is the business doing now? Most importantly, what was his/her contribution in that business?

3) Don’t get carried away by big talk. The intellectual capacity to decipher business situations and gift of gab don’t always go hand in hand.

4) Remember, a consultant needs his client as much as the client needs him. The consultant is just another business associate. There is no need to treat consultants like God. Let that distinction remain for real Gods. No wannabes please.

5) The consultant must not be given any authority to directly give instructions to or seek report from any employee. It has to be routed through somebody inside the company. Do not compromise on the respect of your employees. Consultants may come and go, employees will remain longer.

6) The choice of consultants that you make, speaks volumes about your own value system. I have observed a striking resemblance among the values and results of the clients of certain consultants. They all have a lot of similarities. If you get associated with loud mouth Bol Bachchans, you will end up listening to a lot of hot air. And people will know what you stand for. Choose your consultants wisely. The loser doesn’t have much to lose, but you will end up wasting your time, money, reputation and maybe more…!

7) During your growth period, you will come across many people.  At this stage, whom do you listen to and believe in will make all the difference. Those who influence an entrepreneur’s mind can make or break any situation. Choose your advisors wisely.

8) Academic, theoretical knowledge has to be tested for its application. If every great Professor can become a great consultant, you won’t find so many PhDs filling university rosters at such meager paychecks. All theory is good, but business runs on practical applications.

Bottom line : In selecting consultants, you must learn to distinguish between noise and voice. 

Avoid falling prey to Me-Too Branding

It is that time of the year when all streets across Mumbai are bidding farewell to Ganpati Bappa and urging Him to come again next year. The traditional religious festival is known for the innovative ways in which the organizer Mandals of various pandals across the city decorate the venues and the ways the idol is made or decked up with an innovative variety of things. But since last few years we can see that it is also witnessing some me-too branding exercises.

Among all the pandals across the city, Ganpati idol at Lalbaug in Mumbai is the most famous for its stature, grandeur and its grand final journey. Fittingly, that Ganpati is called Lalbaug Cha Raja. This King of all the idols is known to fulfill one’s wishes and people throng to have His Darshan even after waiting in queues for hours. Every year, it is visited by millions of people including celebrities and it draws a lot of media attention also.

Lured by the publicity that Lalbaug Cha Raja gets, organizer Mandals of many other Ganpati pandals started renaming their venues such as Chembur Cha Raja, Irla Cha Raja, Kandivli Cha Raja etc. This trend has gone to such an extent, that now the smallest lanes and housing complexes have renamed their venues as XYZ Road Cha Raja and ABC Society Cha Raja. Other than the similarity of the name, there is hardly anything comparable to the original Raja. Even though these Organizer Mandals have no commercial interests of brand building, they provide an excellent example of how a lot of MeToo brands spring up surrounding a success story.

In an example of similar MeToo Branding tendencies, we can see many Saree or Jewellery showrooms copying their names behind some successful one. In character, these MeToo sound-alikes have almost no match with their iconic ideal brand whom they aspire to emulate.

The biggest example of Me-Too branding or the tendency of piggybacking on anything popular is Bollywood, named after Hollywood. Without realizing the basic character of the institution, media and some people coined an easy copycat name and we all now take it easy when our films and music are ‘inspired’ by their original overseas icons. In the scale, originality and technicality, Bollywood is a poor match to Hollywood.

Branding is all about creating and occupying a unique place in the minds of the target audience. Uniqueness is the foundation on which a brand stands. By trying to piggyback on some popular brand, we may get some cheap and early recognition, but eventually, the differences will crop up and the expected advantage will backfire.

The brand should create and build its own identity. Me-Too branding weakens our brand’s image.

Copying some popular brand name is as thoughtless as naming our son Sachin assuming that he, too, will grow up and become as famous as a legend like the master blaster Sachin Tendulkar.

The fundamental fabric of the brand’s identity must be woven thread-by-thread through some creative, innovative and original thinking. Then only it will last longer than the Chinese counterfeits of more popular products.

I conclude with one of my own favorite quotes : “It is easy to compare, it is difficult to be comparable.”

Be original.

Are you focusing on the bigger picture of your business?

Rakesh had inherited a small 200 sq feet provision shop from his father. Then he bought two adjoining shops and grew it to 1000 sq ft size. His store was very famous in the neighborhood and people used to flock it to buy things from there. He gave a lot of personal attention to the store decor, cleanliness, inventory control etc. He checked these things himself. He spent his whole day at the store. He was very happy with his own progress.

His cousin, Nimesh also had inherited a similar shop, but today, Nimesh owned a chain of around 50 stores across the country and was aiming at 300 stores in next 5 years. Nimesh’s stores were also very famous for their quality, variety, cleanliness and service. Rakesh wondered at the 50 times higher growth of his cousin. He was curious to know what he should do to grow that big. Once, he asked Nimesh about this.

Nimesh told him his simple secret. “You and I both have 24 hours in a day, just like anybody else. What activities do we focus on during these 24 hours makes all the difference. We may focus all our time on doing the daily routine things or we can also focus on building our teams to take care of the routine things. I spend time on developing people and processes. First, I standardized my routine activities. Then, I multiplied my hands by finding good people and training them to help me doing routine things. I went on handing over responsibilities to them, which they were capable and willing to do. Today, in 24 hours, I can manage 50 shops, without sitting at any one of them.”

What Nimesh looked at was the bigger picture. We may get busy in developing our small business so much that we forget to prepare to scale it up. For scaling up, we need people and good processes. If we spend all our time in micro managing the things, the business will continue growing at linear rate, but it cannot multiply. For multiplication, we need to focus on bigger picture. For that, we need to get some free time. We need to develop and train our people. We need to develop our own self. We need to learn new things about our business. We need to meet new people.

All this is not possible if we are too busy micro managing. By doing so, we may be able to plug some petty expense, but we may be missing on some huge opportunity. The opportunities exist outside the four walls of our business and for identifying them, we need to keep in touch with that outer world.

Remember Nimesh’s words. We all have 24 hours. We may choose to spend it counting small change in our cash counter or focus on thinking ideas for multiplying our business and stores. The cash counter can be managed by some technology, but thinking cannot be outsourced to technology. The deadly disease of micro managing must be cured before it eats our growth potential. The Titanic sank because the captain focused too much on internal things and could not see the iceberg approaching in the foggy sea of uncertainties. The captain must focus on the bigger picture. Internal tasks can be delegated. Strategy is the captain’s job. That is the bigger picture.

What helps the most in the future success of our business?

At platform no. 2 of Malad station, there is a book stall. The employee there is since 23 years…!

At our home, the same person delivers newspaper since last 11 years. He knows which papers we like, so whenever there is some scheme or some new paper is coming, he always informs.

The helper at the grocery shop from where my wife buys our provision, helps her remember things when she goes to place monthly order. He knows which things are regularly used by us, because he has grown up in that store and he knows buying patterns of all regular customers. My wife feels pride by the special attention that he extends.

The computer maintenance company that repairs our home PC, has one supervisor engineer since more than two decades. He knows entire history of all the various generations’ PCs that came to my home. He understands my problem quickly and sends the engineer accordingly.

The common thing in all the above examples is some employee who has been with the firm since more than a decade. Their presence makes the customer’s experience much more comfortable. Everybody prefers to deal with a known face. A customer’s comfort decides his satisfaction levels. A comfortable, happy, satisfied customer is a profitable proposition for any business. An old (experienced) employee is a very valuable asset to the company, because not only a customer but also vendors or any other party repeatedly dealing with the business finds it comfortable to deal with a known person, rather than dealing with a different person every time.

We all may have encountered the frustration of talking to different, ‘faceless’ persons every time at the call centers of Mobile, Cable, Telephone, Bank, Credit Cards etc. companies. If, for solving a single problem, we need to call that call center more than once, undoubtedly we will be faced with repeating the same thing again to different people. A customer is not happy or comfortable passing through such experiences.

The current health of our business is reflected in the financial statements listing the assets, liabilities, sales, profit, margins or growth rates. It can also be gauged by the market share and the brand equity held by the brands.

But, how can we judge the future sustainability of the growth of a business? Of course, good products, sound financial health, large customer base, good market share, reputation and positive brand equity promise a good future ahead. But, in addition to all this, one vital element plays the most significant role in the building of strong foundation of the company. And that vital element is the number of veterans or senior employees in the company, who have spent many years in the company.

If we look at the successful companies, we can’t miss the significant role played by these ‘veterans’ in consistently shaping the future. An old employee knows the business, its environment, competitors, challenges, its promises and its people. And that knowledge cannot be replaced by replacing that person. When an old employee leaves, this knowledge also leaves along with him. This is a huge loss to the company. The new person may learn and understand the processes, but the experience and knowledge of the old person will never be retrieved. Without the long term availability of good employees, a company just can’t build strong foundation, and hence can’t go much ahead.

An experienced investment banker once shared this with me. “In evaluating any company, we always try to find out how many people at various important positions are with the company since more than five, ten or fifteen years. That tells us about the depth of the experience of the management and the quality of company’s long-term relationship building practices. The newcomers, however highly qualified, can’t be expected to take the company ahead sooner. That company will have to wait longer to really take off. And that waiting may be unaffordable. Moreover, an employee is the first hand witness of what is going on in the company. Every employee has his/her own dreams. They stay with the company as long as they have hope of fulfilling their dreams by working with the company. When a person gets disillusioned, she leaves. So, the tenure of important employees is one very significant indicator of the stability of the company and its future. For us, a company with more veterans is undoubtedly on a strong footing.”

An employee-employer relationship is an important relationship from the business perspective. Maintaining any relationship is a challenging task. It requires give-and-take from both the parties. If the company respects the employee and gives opportunities to express his abilities and realize his dreams, the person will stay with the company for a long time. But, if the company has short-sighted ‘hire-and-fire’ approach, the disgruntled employees will leave, carrying bitterness and spreading bad reputation outside. Those continuing inside also live in a persistent state of fear and will fly away at the earliest opportunity. Those who remain are the sour apples, who don’t find employment elsewhere. Such excessive churn causes a chaos in the company and quality, customers, sales, productivity and profitability suffer because of the persistent instability and uncertainty.

We have to accept this fact that the strength of the foundation of a business depends mainly upon the employees who are with the business since a long time. We must try to keep such employees. We must maintain good relations with them. We must invest in them and help them to upgrade, grow and fulfill their dreams. If they stay and grow, they will help us grow and fulfill our bigger dreams. If we can’t build strong relationships with our employees, how can we expect them to build strong relationships with our customers? To increase the chances of future success, we need to increase the number of long-term employees in the company. It is very simple. We must notice and act on this simple fact.

Otherwise Aaya-ram and Gaya-ram can make our company a guest house, where people come to spend some time in between two good jobs. No wise entrepreneur would like to turn his company into a transit camp or a career parking lot.

BIG reasons of Big Bazaar’s success

Sometimes accused of being a Wal-Mart wannabe, Big Bazaar is surely not a Desi copying an Angrez for sure. It has received great success on its own steam and can be called our own home grown “India’s Wal-mart”, even though the comparison is out-of-place and unnecessary. 

How could Future Group’s Big Bazaar achieve what many Angrez companies still dream to do…? There are some very good reasons and learning lessons for all those who aspire to earn from the buying potential of swelling middle class of India.

1) Big Bazaar has given freedom of choice to those who did not have it in their life
Big Bazaar’s founder Kishore Biyani has popularized the very logical categorization of India in 3 divisions. India-1 is the Upper middle class, about 14% of the population that is the actual consuming class. Serving to this India-1 is India-2, forming about 55% of the country’s population. These are drivers, peons, cleaners, maid servants etc. etc. who have very meager salaries and live a hand-to-mouth existance. The third part is the balance 31% of India-3, which is struggling for the existence.

The Kirana shops which sell goods, do not offer the choice, ambience, service and of course the discounts Big Bazaar offers to customers. You imagine going to your nearby friendly grocer to buy a toilet soap. He will ask you “Which one do you want?”. If you know, you get what you what. But, if you want to know how many new brands, types, sizes are there to choose from, grocer will not be very happy to tell you or show you all this. Such situation is even worse for those from India-2. They are not treated very well if asked such questions or trying to get more information, trying to get a ‘choice’.

Big Bazaar gave them choice. A freedom to choose. It offers a very wide range of goods required for daily needs. You can have a look, touch and feel them, compare and then decide to buy. With the plethora of FMCG items occupying the shelves of stores, such choice is really convenient and facilitating the buyers. This choice, I think, is one very important reason for Big Bazaar’s success.

2) Big Bazaar connects with the masses effectively
The communication of brand Big Bazaar is sharply focused and to-the-point. Big Bazaar talks in local language. Observe Big Bazaar’s communication.

  • “Isse Sasta Aur Accha Kahin Nahin”
  • “Saal Ka Sabse Sasta Din”
  • “Hafte ka Sabse Sasta Din”
  • Sell your Bhangar at great rates”
  • “Purana Do Naya Lo… Badal Dalo”
  • Stall ke Bhaav Balcony
  • Chane ke Bhaav Kaju
  • Paise Jodo Kaam Aayenge

All this smart communication has worked wonders. Today also, you observe any of the advertisements of Big Bazaar competitors. Their tag lines are still in English. This Angrez attitude does not connect with Indians. Big Bazaar has understood it clearly and others have not yet woken upto this simple fact, giving Big Bazaar a clear, distinctive position in customer’s mind. Big Bazaar is perceived as a store which knows India and Indians well. Its communication has been successful in achieving this objective.

3) Big Bazaar has understood its target customer very well
If you go to a super store in any mall, we may find some very smart boys and girls greeting us. This may be good for some, but people like me sometimes get frightened by these fine and smart people, because they are so much better looking than me. They speak so much better than me. They are dressed much better than me. I get put off by all this and hence avoiding such stores who have very smart people greeting me. At Big Bazaar, the staff is helpful, but not overtly smart. You don’t get frightened by their style. This is very practical. The customer coming to Big Bazaar is of the middle class If they are greeted by people smarter than them, they feel uncomfortable. So, Big Bazaar has ensured that customers are not made to feel small by overbearing staff members. This is one very smart strategy of Big Bazaar and it reflects its deep understanding of the customer psyche.

4) Big Bazaar has understood changes reshaping India very well
With increasing urbanization, more and more people are migrating to cities from villages. In villages, there are no big stores, but in nearby towns there are weekly ‘mandi’ e.g. Somwaari Bazaar, Budhwaaar Bazaar, Ravivaar Bazaar etc. In such mandi set up, one gets to look, see, touch  and feel all the ware that is for sale. This is what the village customers are habituated to do. When they come to cities, they had to buy from small kirana shops, where the goods were not displayed freely. They had to ask for what they want and get away from there. Big Bazaar recreates that mandi environment for them. It gives them the same open display of all that is available, and that too, in elegant, clean, air conditioned ambiance with helpful staff to support the customer.. And I think, this is profoundly important from a customer’s point of view. The current demographic shifts happening in India are understood very well by Big Bazaar and are implemented profitably.

The mythical 50 Crore Indian middle class is a part of many smart projections of world leader retail giants willing to enter India. But, Kishore Biyani and Big Bazaar have succeeded in getting to the true understanding of Indian middle class. This a very important learning lesson for all those who wish to succeed in retail in India.

Why products fail?

It is not rocket science to understand why products fail. Good or bad products can be identified by the quality of their advertisement campaigns. These days, an advertisement of a chewing gum is appearing on TV. It promotes the chewing gum that can help you take fast decisions and make smart choices. This is a perfect example of a mediocre advertisement. There is nothing good about the TVC. The theme is outright downmarket and dirty. The cast is of that calibre only. The storyline is also very very distasteful. It cannot be worse. The advertisement is showing three teenager boys ogling at titillating film posters or some real girls partying or taking a swim in a pond. The whole idea is horrible distasteful. First of all, the boys are shown of very tender age. No parent would like to see the advertisements like this along with their teenagers.It is utterly disgusting, to say the least.

The production quality of the advertisement is also very poor. The voice over is so unclear that the name of the product cannot be heard. Same is with the visual of product logo. Even after seeing the advertisement for 10-15 times, you may not understand what is the NAME of the product….!

Looking at the advertisement, you may feel that mediocrity works in groups. The product, the marketing and the advertising team all have proved that mediocre people find each other and produce mediocrity with zeal.

And to top that, one music channel had that product as sponsor of today’s Valentine’s Day… One more mediocre adding itself to the gang….!

No wonder, mediocre products fail. And I must say, they must. Miserably…Even if they are made by great companies. Finally, great companies also have mediocre people occupying privileged positions on its desks. I wish the good sense prevails in the company.