FEBRUARY 2017 VO L U M E 5 6 I S S U E 2 PAG E S 9 2 r60

MARKETING
IN EMERGING
ECONOMIES
SPOTLIGHT
BUDGET
2017

DR JAGDISH SHETH DR RAHUL SINGH PROFESSOR PIYUSH SHARMA

Emory University Birla Institute of Curtin University
Management Technology
 JAYPEE BUSINESS SCHOOL
MBA 2017

Learning with the Leaders

XI BATCH 2017-19, MBA ADMISSION

GDPI
Saturday, March 11, 2017
Noida, Jaypee Business School
Sunday, February 26, 2017
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Sunday, March 5, 2017
Bhopal, Hotel Amer Palace
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 THE JOURNAL OF THE
ALL INDIA MANAGEMENT ASSOCIATION

VOLUME 56 ISSUE 2 FEBRUARY 2017

THIS ISSUE

18
COVER STORY

spotlight on budget 12 CUSTOMER RELATIONSHIP

- Nilesh Shah, Kotak Mahindra Asset Management Engage first, sell next 34
Company Limited An engaged customer base is essential for
- Anant Gupta, TECHCELX developing a successful business.
- Ganesh Natarajan, 5F World and NASSCOM Foundation - SHI L NI Y OGI
- Sourajit Aiyer, Motilal Oswal Financial Services Limited
CASE STUDY

COVER STORY
A change of course 38
Financial services KPOs will need to undergo a
Through a different lens 20 major overhaul to sustain in India.
Recalibrate your marketing approach in emerging markets. - DR NIT I N B A LWA NI
- DR JAGDISH SH ETH MARKETING
Democratising the marketing approach 26 Think before you leap 46
Democratisation of marketing is in tune with the concept of How different is startup marketing from the
value co-creation. mainstream one?
- DR RAH UL SINGH - R A JI V JOSHI

The emerging reality 30

Emerging markets should not be seen through the
cultural-institutional lens of the typical Western context.
- PIYUSH SH ARMA
 BETWEEN
THE
COVERS

SUMMARY
G LAKSHMANAN ON
COMPETING AGAINST LUCK

EXTRACT
THE ESSENTIAL BOOK OF
CORPORATE GOVERNANCE

BOOKSHELF

MUST READ

WOR K C U LT U R E TALENT RETENTION

Listen to everyone 62 Busting ghosts 82
Feedback is important for establishing an amicable Managers must ensure office ghosts are not created
work environment. instead of trying to bust them.
- ABHIJ I T NIMGAONKAR - V ISH WANATH P
PERSONALITY DEVELOPMENT SECTOR FOCUS
Get hold of yourself 66 Firm ground 86
What are the essential abilities of extraordinary The impact of demonetisation on the real estate
people? sector.
- VIRENDER KAPOOR - AR UNA DH A DE
CORPORATE WELLNESS
Fit companies 70
Investing in employee health results in increased
productivity.
- AMARESH OJH A
LEADERSHIP
Maximising potential 74
Leaders should find new and efficient ways to keep
their employees at their finest.
- GA URAV DUREJA
E-TAIL
A healthy option 78
Challenges facing online pharmacies in India.
- PRADEEP DADH A
 PRESIDENTS
MESSAGE
Marketing in emerging economies
SUNIL KANT MUNJAL is President, AIMA and Chairman, Hero Corporate Service.
F
or consumer-facing businesses, the West
is no longer best; households in the US
and Europe are no longer reckless and
spendthrift. Years of stagnant incomes,
joblessness, and recessionary conditions have
extracted their toll, and consumers are less
inclined towards making discretionary purchases.
As a result, most market and brand growth has
shifted to previously neglected and underserved
markets across emerging economies, especially
in Asia and Africa, where incomes
and aspirations have risen
rapidly, leading to sustained
The key emerging periods of growth. Often, the
markets are expected growth momentum is strong
to contribute nearly half enough to withstand setbacks.
In India, for example, even
the GDP growth of after the debilitating impact of
the world. demonetisation, the worst case
growth forecast for 2016-17 is by
the IMF, at 6.6%.
A McKinsey study projects that by 2025,
emerging economies will have more than half the
households in the world with an annual income of
more than $20,000the sweet spot that results
in disposable incomes for spending. The key
emerging markets are expected to contribute
nearly half the GDP growth of the world. In
recent years, MNCs have started prioritising their
presence in these challenging but immensely
promising markets.
However, they are also learningsome of
them painfullythat marketing and selling
templates cannot be robotically transplanted
from developed to emerging economies. Markets
across most emerging nations are extremely
fragmented; this makes it very difficult to create
national brands with large market share.
Unlike the fairly homogenised developed
markets, emerging markets have not one but
many ecosystems of selling prevalent, with
8 INDIAN MANAGEMENT FEBRUARY 2017
considerable divergence in income, culture and
infrastructure. There are also submarkets, which
increase the challengeand sometimes, the
opportunityof localisation.
Homegrown Indian firmsas also MNCs who
have cut their teeth in India for many years
enjoy a natural advantage over MNCs whose
presence in the country is of recent vintage. They
have mastered the art and science of competing
on price, overcoming infrastructure constraints,
and have developed innovative practices across
the supply chain.
They are also used to adapting to different
consumption habits and communication
cultures. For example, when Hero Honda was
first launched in the 1980s, the saree guard
attached to the pillion seat was brought in as an
important local innovation, and it found ready
acceptance, especially in the southern and
eastern geographies.
Of course, it is important not to underestimate
the challenges that emerging markets pose.
Typically, markets in the early stages of
development tend to lack organised and reliable
market information. In India, in the 1990s, for
example, there was very little knowledge about
aspirational behaviour and the potential that the
mobile market presentedthis was seen as a
market for the elite.
Moreover, the level of competition and the
presence of media tend to be hyperlocal and
extremely fragmented. In many categories,
especially in personal and home staples,
unbranded products rule the roost because of
limited entry barriers, and the modest role played
by technology. Wherever there are significant
local players, it takes years for organised
brandsto win market leadership and, more
important, to make profits.
An effective way to enter emerging markets
has been to acquire established local brands
and piggyback on their reachboth in terms of
consumers and the sales channel. Acquisition of
local brands is also necessary to consolidate the
market, build market share, and acquire pricing
power. However, sometimes, it could also be wise
to enter an emerging market by creating a new
category or via an underserved category where
local players are not as well entrenched.
Appreciation and respect for the local culture
is crucial for marketing success in emerging
markets, and marketers must imbibe the local
language, nuances, and symbols.
It is vital to acquire local understanding
and insight before bringing in global brand
communication (Coke and McDonalds learnt
this lesson in India after some trial and error).
Messages of too many brands are lost in
translation and, at times, cultural faux pas
even end up offending the local consumers
and politicians.
When Pepsi used their slogan, Come alive
with the Pepsi generation in China by literally
translating it, they did not know that the literal
translation of the slogan meant, Pepsi will bring
your ancestors back from the dead! Pepsis rival
made the same mistake in the same country.
When Coca Cola had to translate its name in
Mandarin, it chose Ke-Kou-Ke-La, which meant,
bite the wax tadpole or a female horse stuffed market for introducing a brand and then develop
with wax.
Localising brand attributes is essential to
connect with consumers in emerging markets.
Typically, consumer desires and concerns in
developed markets are focused on sophistication
and personalisation. In emerging markets,
it is more about affordability, durability, and
status. Also, in developed markets, effective
advertisements and celebrity endorsements
are usually adequate to persuade consumers.
On the other hand, personal recommendations
from family and friends have a higher weightage
in emerging markets, especially in new
product categories.
Localising pack sizes and material, product
features, as well as prices, are other important
challenges in emerging markets. The fragmented
nature of markets ensures that the same brand
has to be aimed at targeting consumers from
different regions, cultures, incomes, living
conditions, and retail infrastructure.
In India as a result, sales and product
managers have to regularly tweak their marketing
mixincluding pricing, packaging, point of
purchase displays, etc.each time the product
crosses the Vindayas or the Ganges! For
example, food and beverage marketers have to
offer the same product in glass, paper, plastic
and tetra packaging, depending on where
they are selling. Rural areas need tougher and
more durable packaging to survive demanding
transportation and storage. Also, at the bottom of
the pyramid, marketers have to offer single-use
packs at the lowest possible price.
Organising and prioritising marketing in large
emerging markets is another challenge. Typically,
multinationals tend to err by having a country
strategy, irrespective of the complexity of the
market. It is practically impossible to begin
marketing to an entire country at the same time.
So what are the options for marketers wishing
to make a mark? Clearly, they have to identify
the more relevant and relatively homogenous
markets for their products, at least initially, in
order to control costs and logistics. It helps
to identify the most suitable parts of the local
the strategy for achieving a reasonably significant
market share quickly. Pinpointing and prioritising
the relevant areas of the market can allow large
growth without spreading resources too thin.
For example, a 2014 projection by McKinsey
shows that eight high-performing states, namely
Gujarat, Haryana, Himachal Pradesh, Kerala,
Maharashtra, Tamil Nadu, Andhra Pradesh and
Uttarakhand, will together account for 52% of
incremental gross domestic product growth from
2012 to 2025.
It will not be surprising therefore that from here,
marketers from around the globewith less time
on their handswill, at least in the near term,
focus much more heavily on growth frontiers such
as these, both in India and around the world.
The opinion expressed is personal.
INDIAN MANAGEMENT FEBRUARY 2017 9
 EDITOR S
NOTE A SPENTA MULTIMEDIA PVT LTD PUBLICATION
F EB R U A RY 2 0 1 7 VO L U M E 5 6 I S SUE 2

EDITORIAL ADVISORY BOARD

S L Rao
Sunil Kant Munjal
Rekha Sethi
Dear Readers, Prof. J K Mitra

A
s growth slows in the first economic tier of nations, the focus
shifts to emerging markets, especially those with a stable
political regime. As the epithet emerging denotes, they have
been emerging out of their traditional mooringstackling
Maneck Davar
N Radhakrishnan
EDITOR & PUBLISHER I Maneck Davar
MANAGING EDITOR I Krishnaveni Subramanian
ASSOCIATE EDITOR I Anitha Moosath
EDITORIAL TEAM I Titash Roy Choudhury

inadequacies, harnessing innate strengths, and catapulting into the global DESIGN

arena. They now make substantial contribution to the global GDP, thereby ART DIRECTOR I Parvez Shaikh
GRAPHIC DESIGNERS I Nikunj Parikh, Payal Sumaya
reshaping the economic hierarchy.
ILLUSTRATORS I Swapnil Redkar, Darshan Sompura
However, doing business in these markets is an arduous task. It demands
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10 INDIAN MANAGEMENT FEBRUARY 2017

BUDGET 2017
WIDENING
THETAX
BASE, AN
IMPERATIVE
NILESH SHAH
Managing Director, Kotak Mahindra
Asset Management Company Limited.
s per latest data available for AY 2012-13, little
A
under four lakh people paid income tax above
R5 lakh, but in the same year more than 39 lakh
three-wheelers and four-wheelers were bought.
The current tax base is less than the number of
people who travelled abroad in FY 16. A low tax
base can be attributed to the following factors:
Fear
of law is missing in most tax dodgers. The government has
brought amnesty schemes in one form or the other at regular
intervals to create this impression. Most amnesty is at a huge
discount compared to the normal tax liability, encouraging non tax
compliance. Unless the government is able to create fear of law,
the tax base is unlikely to widen. It must step up efforts to nab tax
avoiders through an analysis of transactionsdata analytics can be
12 INDIAN MANAGEMENT FEBRUARY 2017
used as a tool. It should levy punitive penalties,
including imprisonment, to create fear of law.
There are multiple tax exemptions that allow
people to avoid paying taxes. Long-term capital
gain on equity shares meant for retail investors
is enjoyed maximum by the richest Indiansi.e.,
promoters selling their stake in listed companies.
On unlisted shares, as per the governments
own admission, R80,000 crore worth of bogus
LTCG is booked. Bonus stripping is a cottage
industry in the capital market. Multiple entities
like AOP, Trust, HUF, and LLPs allow rampant tax
avoidance. The government must simplify rules
to levy tax rather than create a complex set of
rules for tax exemption. In a sense, we need to
change the orientation of our tax system from let
100 people run away from paying tax but let one
person not pay unfair tax. Our motto should be,
let not only the salaried class be burdened with
the onus of paying tax. Let other people also pay
their fair share of tax like the salaried class.
We
do not call for a balance sheet along with
income tax returns. In the absence of wealth
tax and estate duty, it is difficult to establish
ownership of assets. Due to this loophole, many
black assets over a period of time become white.
For example, when people contesting elections
declare their wealth statement, it is important to
ascertain whether they have paid appropriate tax
on the same or not.
Agriculture
remains a taboo. Almost 70% of the
population is engaged in the agriculture and rural
sectors. They are not liable to pay tax. While there
cannot be a debate about not taxing marginal
farmers, rich farmers and tax dodgers should not
be able to avoid paying taxes by converting non-
agricultural income to agricultural income.
The government must simplify rules to levy tax rather than create a complex set of rules for tax
exemption. In a sense, we need to change the orientation of our tax system.
The
IT department is far more focussed on existing
taxpayers. They need to be motivated to expand the tax net
through suitable incentives and training. The present IT
department process also results in long litigation. An adverse
order at a lower level is challenged at a higher level for fear of
reprisal. There should be a suitable mechanism to safeguard
them from taking appropriate decisions so that their energy
is not wasted in time-consuming litigation. Instead, they can
put their energy in expanding the tax net.
The government must bring in a whistle-blower mechanism
with respect to tax non-compliance. The present system of
rewarding informants is neither well advertised nor attractive.
If it can devise a scheme for whistle-blowersoffering them
attractive rewards and adequate protectionthen one can
see a massive increase in tax compliance.
Tax
compliance can also be improved with a positive
approach. Today, other than being rewarded a certificate,
taxpayers are not given special recognition. It is important to
give certain special favours to taxpayers. For example, a fast
track mechanismat airports, cricket stadiums, hospitals,
or government departments for various servicesfor those
who pay more than R1 crore as income tax. Such positive
recognition will pull people to be tax compliant.
The
tax base can also be widened by introducing newer
format taxes like estate duty and wealth tax, on a par with
global standards. We need to draft our tax laws with the
help of outside experts so that loopholes and shortcuts are
plugged. It is also important to educate the judiciary about
the spirit of the law than just the letter of the law. Many a
time, economic crime does not receive due attention as it
does not leave dead bodies and blood on the street.
India, as a nation, does not have a choice but to expand the
tax base to create a fair distribution of tax burden between
the salaried and non-salaried class. Modern technology-
led data analytics, proper drafting of laws, and appropriate
administration can help expand the tax base.
INDIAN MANAGEMENT FEBRUARY 2017 13
BUDGET 2017

A STEP IN Promotion Board (FIPB) is also a good sign which

THE RIGHT
underlines the continued liberalisation intent of
the government; it is good for both startups and
established companies on the lookout for growth

DIRECTION
capital. The only additional move this sector could
have benefited from are some new tax benefits to
further safeguard the interests of the IT industry,
which is under tremendous pressure from
anti-globalisation sentiments and new visa reforms
ANANT GUPTA being tabled by the US administration.
But as a wise man said, you cannot have it all.
Hence what the Finance Minister has served this
Founder Chairman and CEO, year should be good enough from the countrys
TECHCELX. overall progress perspective.
At the end of the day, that is all that should
matter anyway.

hile most nations are walking, some stumbling,

W
into a digital future, India is clearly leaping. The
Union Budget 2017 is a progressive mission
statement that will go a long way in not only
further reducing the digital divide in our country,
but also laying the foundation for new institutions
of the future. With an allocation of R1,87,223
crore for rural programmes, the government seems to be in a mood to
somewhat appease the groups most afflicted by the demonetisation
drive. Well, whatever the motive, it is a step in the right direction and
needs to be appreciated.
Since I am a technologist and a startup evangelist, the Union
Budgets top highlights from my perspective are the expansion of the
BharatNet Project, launch of a new online education platform, boost
to digital payments, and a few but well-intentioned sops extended
to startups and MSMEs. The abolishment of the Foreign Investment

14 INDIAN MANAGEMENT FEBRUARY 2017


TECH
GAINS
DR GANESH NATARAJAN
Chairman, 5F World and
NASSCOM Foundation
nion Budget 2017 has been a well-crafted one
U
that combines growth with fiscal prudence.
With its expected slant towards agriculture, skills
development, and the less served segments of
the country, it can lay the foundations for a period
of robust GDP growth in a truly inclusive India.
Digital India and digital literacy had already
received a big boost as an unexpected side effect of the
demonetisation drive, and the focus on digital in the budget bodes well
for Indian IT firms. The expected continued focus on digital payments
and the announcement of setting up of the Payments Regulation Board
and strengthening cybersecurity for digital financial transactions are
welcome signs for an economy that is slowly becoming cash mukht.
The technology sector will also get opportunities from initiatives such
as SWAYAM, the announced pension platform for defence, Digi Gaon,
etc. In an increasingly gloomy global environment,
and weak economic growth, it would be appropriate
for large and medium-scale companies to join the
queue for government and public sector IT and
digital opportunities of the future.
IT startups have something to look forward to, with
the extension of the time period for eligibility of the
three-year income tax exemption from five to seven
years, and allowing carry forward of losses even if
the stakes of promoters fall below 51% which is
a natural growth process in an entrepreneur-filled
economy. The reduction of TDS on payments to
call centres from 10% to 2% will facilitate more
BPO activity and employment generation in Tier II
and Tier III cities. The budget also addresses one
of the concerns of the sector related to tax disputes
abroad, but misses the rationalisation of transfer
pricing safe harbour margins for the IT sector, which
has been pegged at unrealistic levels.
While nothing much was expected for exporters,
a long-standing claim for extending R&D incentives
to this sector is yet to be addressed. But overall, the
budget does point to a more harmonious regulatory
environment with the governments plans to simplify
existing labour laws and increase the period for MAT
credit carry forward to fifteen years.
The IT sector can now be a true partner to new
skills initiatives by enabling technology to provide
support to trainers and mentors and address the
gargantuan task of getting 300 million Indians ready
for employment and entrepreneurship through
compelling content served through technology
platforms. Digital solutions created by the industry
for manufacturing, retail, insurance, banking, and
healthcare can also enable easy access to the
best services.
Overall, there is much to be optimistic about. For
the IT sector, which is waiting for the Damocles
sword of Trump to descend in the form of visa curbs
and other potential protectionist moves, there is
a sense of satisfaction that in India, we will have a
robust and continuing supply source of talent and a
potential large market in the making.
INDIAN MANAGEMENT FEBRUARY 2017 15
BUDGET 2017
BUDGETIS
NOT TAXING
SOURAJIT AIYER
AVP Investor Relations and Corporate Planning,
Motilal Oswal Financial Services Limited.
ndias budget for 2017-18 places fiscal stability
I
ahead of growth through spending. Total
expenditure increased a mere 6.5% over the
previous year, showing the governments tight fist.
This is an antithesis to what many imagine, that
driving growth is foremost in emerging markets.
But fiscal stability helps keep credit ratings in
control, which is key to maintain attractiveness to foreign investors.
Increasing government debt to fuel growth is not sustainable now. A
stable macro situation also strengthens the case for lowering interest
rates, which can partly help in reviving private sector investmentone
hurdle in pushing job growth.
The budget reduced the personal income tax rate from 10% to 5%,
on income in the R2.5-5 lakh slab. This is a politically good move since
a majority of salaried taxpayers in a middle-income nation like India fall in
this slab. It increases disposable income by R12,500 in the hands of all
whose income is R2.5 lakh and above. But those with income only up to
R5 lakh will see an effective impact of R10,000, not R12,500. They had
earlier got a rebate of R5,000; it has now been reduced to R2,500.
The budget also simplifies tax forms and reduces scrutiny for this
segment. Nevertheless, the question is: what does an additional
16 INDIAN MANAGEMENT FEBRUARY 2017
R10,000-12,500 a year get you? While it will boost
consumption, it can only afford FMCG products, or
low-priced consumer durables, not laptops or HD TVs.
The budget levies a 10% surcharge tax on those
with income between R50 lakh and R1 crore. This
is a segment neither big enough to use investment
vehicles to route monies offshore unlike HNIs,
and yet cannot reduce their tax liability beyond a
point using exemptions. This is another politically
correct move to get mileage from small taxpayers
who form bulk of the voting base. The question
is: will an enterprising tax lawyer come up with a
collective offshore routing plan which this segment
can misuse to evade taxes? Additional scrutiny will
determine how much positive this actually yields.
The budget also reduces corporate taxes from
30% to 25% on MSMEs. They employ about 80-
100 million Indians though they contribute only one-
third of the countrys GDP. The sheer labour force
hired shows why this is another politically correct
move. But since MSMEs account for only a small
proportion of corporate tax earnings, the loss is
small. But the argument that reduction in corporate
tax rate will help generate more employment seems
premature. This is because an accretion to net
profit after tax positively impacts the promoters who
can dividend it out, and it need not be ploughed
back as retained earnings to grow the business
(and hire more workers). Even if incremental profit
is ploughed back as retained earnings, it does not
mean promoters will automatically hire more or raise
wages. Indian listed company data shows financial
sector companies grew their profit per company
in the last five years; their CAGR in employee
costs severely lagged while the employee cost to
sales ratio declined slightly. Many MSMEs remain
uncompetitive against larger rivals, and a cut in taxes
may not be sufficient to improve competitiveness in
this age of technology, automation, and innovation.
In conclusion, Prime Minister Narendra Modis
government is creating an enabling, conducive
climate on which private businesses can capitalise.
It seems to have walked the tightrope deftly, in
terms of keeping Indias financial health in order.
 Embassy of India
Abu Dhabi, United Arab Emirates

Under the Patronage of

His Excellency Sheikh Nahyan bin Mubarak Al Nahyan
Cabinet Member and Minister of Culture and Knowledge Development, United Arab Emirates

nd
2 India - UAE Conference
Resetting Globalization: Collaborating in a Fast Changing World
Monday, 20th March, 2017 Hotel Taj, Business Bay, Dubai

Conference Chairman Eminent speakers confirmed to address include

Sunil Kant Munjal
President, AIMA and
Chairman, Hero Corporate Service Pvt. Limited, India
Interactive Sessions on
Healthcare Innovation: Recoding Competitiveness
Reinventing Retail: Beyond E-commerce
Globalization of Business
Who should attend
The conference will bring together policy makers, CEOs, thought leaders,
technocrats, entrepreneurs and investors from both India and UAE to
discuss strategies to promote cooperation and collaboration between
the two countries and to discuss strategies to win in the Digital World.
Navdeep Singh Suri, Ambassador of India to UAE
Tayeb A Kamali, Director General, Education and Training Development,
Ministry of Interior, UAE
Yusuff Ali MA, Chairman & Managing Director, LuLu Group
BR Shetty, Executive Vice Chairman & CEO, NMC Healthcare
Azad Moopen, Chairman, Aster DM Healthcare, UAE
Kishore Biyani, Group CEO, Future Group, India
T V Mohandas Pai, Chairman, Manipal Global Education Services, India
Naresh Trehan, Chairman & Managing Director, Medanta - The Medicity
Arvind Lal, Chairman and Managing Director, Dr Lal Pathlabs Ltd, India
Adeeb Ahamed, Chief Executive Officer, LuLu International Exchange
Ramesh Cidambi, COO, Dubai Duty Free
Suhail Mahmood Al Ansari, Executive Director, Mubadala Healthcare

Registration Details Corporate Contributor Supporting Partners

Participation in the conference is by "Invitation Only"
Pre-registration is MUST, as seats are limited.
Confirmation depending upon seat availability

For further details, please contact

Mansoor Hassan, All India Management Association, Mobile: +91-9540060166, Landline: +91-11-24608524, Email: mhassan@aima.in
Web: www.aima.in
To best capture the potential of emerging markets,
businesses need to chart a different path.

Navigating
emerging
markets
THROUGH A DIFFERENT LENS
DR JAGDISH SHETH
DEMOCRATISING THE MARKETING APPROACH
DR RAHUL SINGH
THE EMERGING REALITY
PIYUSH SHARMA
 COVER
STORY

Through a
different lens
Breakout marketing is the way companies can
use what a given market offers (culture, values,
systems, and needs) and introduce what it lacks
(technologies, methods/processes, products, and
brands), thereby transforming both themselves
as well as the market. Notably, although brands
usually begin their journey in emerging markets
by converting light users into heavy users, the great
market expansion that marketers aspire to really
comes from large-scale conversion of non-users
to users.
In an exclusive interview, Dr Jagdish Sheth
tells Anitha Moosath how a departure from
the traditional marketing paradigm can help
businesses succeed in emerging economiesa
thought he elaborates on in his book Breakout
Strategies for Emerging Markets.

INDIAN MANAGEMENT FEBRUARY 2017 21


Shutterstock.com
Emerging markets have offered the biggest
growth opportunity in the history of capitalism.
So how strong is a case for entering and
competing in an emerging market?
I think it is as strong as the survival of a company.
All advanced countries are ageing much more
rapidly than we ever imaginedthere is hardly
any growth left in these countries for businesses.
Also, at a time when growth is moving away from
product to services, the only place where one
can seek growth would be in an emerging
market, primarily.
Converting non-users into users in emerging
markets is the biggest game one can play instead
of fighting for market share. Moreover, emerging
22 INDIAN MANAGEMENT FEBRUARY 2017
markets are no longer agrarian economies with a
predominant BoP consumer segment.They comprise
a burgeoning middle class and a growing affluent
class who are becoming increasingly brand conscious
and driving growth in consumption. And technology
is playing the role of an enabler in this context.
Eventually, India and China will definitely grow
as consumer economies, with the largest portion
of their GDPs coming from the consumer sector,
not from the industrial or government sectors.
Given this prospect for growth, it is imperative
for businesses to participate in emerging markets.
However, many multinationals fail in emerging
markets because they go global everywhere, taking
their models as they are. Or, even while going
glocal (global with local adaptation), they do not
do it well.
Emerging markets are marked by a high degree
of heterogeneityan illiterate population, socio-
cultural differences, unbranded competition, poor
infrastructure, scarce resources, and unfamiliar
regulatory structures. Navigating this complexity
demands a paradigm shift from the traditional
marketing approach, and this forms the premise of
our 4As framework.
Could you elaborate on the 4As framework?
The eight breakout strategies we have proposed
in the book are based on the 4As framework
acceptability, affordability, accessibility, and
awareness, the four essential values sought by
customers. It entails an outside-in customer-
centric approach as opposed to the traditional
inside-out product-centric approach. These 4As
have immense potential to effect transformative
change. They can also spark reverse innovation
for instance, a product/service developed for an
emerging market could have global opportunities
as well.
To ensure optimal customer outcomes, there
has to be a joint mix of the 4As and the traditional
marketing mix of the 4Psproduct, price, place,
and promotion, along with people and processes.
Each of the 4As is linked to the 4Psfor instance,
affordability demands evaluation of pricing and
 INTERVIEW

STARBUCKS IN CHINA

Starbucks cafes in large cities like Beijing and Shanghai mirror those in the West, but as Starbucks expands
into second or lower tier Chinese cities, they are blending regional elements into their in-store experience. In
Chengdu Taikoo Li, the cafe features Sichuan-inspired tiles, silk artwork by local craftsmen, and warm colors
in the interior (Starbucks 2014). In Taikoo Li Sanlitun, a modern, upscale shopping area, Starbucks features
works by local graffiti artists (Burkitt 2012). In Fuzhou, a small town with a population of 7 million, Starbucks
drew heavily from the local culture and came up with a local courtyard home design with sliding doors,
soaring ceilings, and a screen with black and white pieces of the chess-like Chinese game Weiqi (also
known as Go). At the cafe entry, a large stone, taken from the mountains nearby, bears the Starbucks logo.

Thus, Starbucks has had to create fusion by retaining its basic cafe design but avoiding its standard white
look, which signals affluence in the West but indicates quite the opposite in Chinaa product no one wants!
Such tactical approaches are important as companies move from large, affluent, Tier 1 cities like Shanghai
and Beijing, which have optimistic, affluent, more Westernized consumers, toward Tier 5 towns with lower
income, thrifty, rural consumers; in these towns, fitting in is more important than standing out, and smaller-
sized establishments are steeped in local cultural cues (Wentz 2012).*

The biggest mistake product, and accessibility of the Western concept of a wine lifestyle into
many MNCs make is products and processes. Indian culture.
A good example of functional fusion is
focusing only on the Functional fusion and cultural Whirlpoolto address the water shortage problem
upper echelons of society, fusion... in India, they made a fully automatic, top-loading
ignoring the potential Each of the 4As has two washing machine that restarts the washing cycle
dimensionsfor example, from the point it cuts off, instead of restarting from
offered by the BoP the beginning.
acceptability can be functional
segment. and psychological. Marketers
often overdo psychological How best can you democratise your offer in
acceptability and underdo functional emerging markets?
acceptability. The biggest mistake many MNCs make is
It is not just about localisation. In emerging focusing only on the upper echelons of society,
markets, one has to take into consideration the ignoring the potential offered by the BoP
physical environment, culture, climatic conditions, segment. Instead, they should develop multi-tier,
genetic differences, etc., and ensure functional multi-segment strategies and target consumers
fusion and cultural fusion. from different socioeconomic backgrounds with
At Hong Kong Disneyland, the park design suitable value propositions. The health industry
and landscaping incorporate many elements of is a case in pointmany pharma companies
Chinese culture. This kind of blending has been are investing heavily in R&D to develop new
happening in literature, arts, fine arts, and so on. It technologies/breakthrough drugs for diseases
is now beginning to come into consumption too. rampant in emerging economies such as malaria,
McDonalds is another vibrant exampleits India tuberculosis, and HIV/AIDS. Companies should
recipe avoids pork or beef, taking into consideration democratise their offer in emerging markets
the religious sentiments of the local populace. by ensuring affordability, both economic
Sula Wines has gone a step further by assimilating and psychological.

INDIAN MANAGEMENT FEBRUARY 2017 23

If a foreign multinational There is also this whole companies but also collaborate, on home turf;
succeeds, it is a good phenomenon called reverse and they learn new strategies, technologies, and
brand cycle with respect to processes.You can clearly see that in the Indian
wake-up callyou feel emerging marketsinstead of context. E-commerce companies such as Flipkart
that your familiarity with going to a premium market with and Snapdeal are learning so much from Amazon.
the socio-political system a top invention first, you start They are now learning how to do business totally
off in an emerging market by
and local realities do not introducing a low-end product.
differently from what they were doing earlier. It
seem to work for you. is evident in the automobile industry toothere
Because priceaffordabilityis
are so many foreign firms now wanting to come
the key bottleneck here.
Many automotive companies such as Toyota and to India and they are crowding out. So, either
Volkswagen have done this in India. So, they are Indian manufacturers will go out of business,
able to reach across all price points and appeal to not as a whole company but product line by
different segments of the market. product linethat is how they exitor they will
learn how to survive. If a foreign multinational
How does the entry of foreign players succeeds, it is a good wake-up callyou feel that
transform domestic companies? your familiarity with the socio-political system
Foreign competition will clearly bring in and local realities do not seem to work for you.
different processes and approaches to marketing, It motivates a local company to think differently,
merchandising, etc. It definitely brings about a to compete. This is true of many industries
transformative change for domestic firms. They consumer electronics, airlines, and so on. The
learn to not only compete with international success of Indigo Airlines is a case in point.

LEVI STRAUSSS DENIZEN JEANS FROM CHINA

Levi Strauss, the maker of Levis jeans, developed its Denizen brand of low-cost jeans for China. After eight
months of experience selling this brand to Chinese and other Asian shoppers, they brought Denizen to
their home market in the US, where they retailed for one-third to one-half the cost of a pair of Levis. Having
learned how to launch a value brand and nurture it in China, Levis has become one among a handful of
multinational firms to leverage the growing influence of emerging economies for reverse product innovation.
Launching in India and China, which are two very different cultures with consumers who have different body
types, style, and customs, gave us a chance to learn about how to make a brand relevant for the market,
said Lance Diaresco, vice president of marketing for Denizen. We learned about fit and how to work with
our franchise and wholesale customers to help them select the fits most relevant for their consumers
(Zmuda 2011).

Although China has been home to many global apparel manufacturing companies, consumers in China
have had little influence on global design and marketing. Clothing has lagged behind sectors such as
telecommunications and beverages, where multinationals have boosted their R&D in emerging markets and
local rivals are producing a growing volume of innovations. According to Aaron Boey, president of Denizen,
Levis had learned to produce affordable jeans by working out which features consumers were most
sensitive tothe stitching, the way the fabric feels, or the wash of the denim. Its not about taking costs
out, its about deciding what costs to put in to deliver the value that consumers appreciate, he said. Weve
gotten that validation in emerging markets were currently operating in. So, we now we can nail it as well as
in the US.*

24 INDIAN MANAGEMENT FEBRUARY 2017

 INTERVIEW

The demographic dividend Need to adopt stakeholder patterns, and so on. The government needs to
factor is true for the orientation as opposed to look at the ageing aspect too.
customer orientation...
next generation. Now, Marketers have generally Does the Make in India initiative make our
we also have an ageing been thinking about only one market more attractive?
population; we are stakeholderthe customer. I think Make in India is a highly viable project.
expanding on both sides. But marketers need to adopt a There are several industries that hold immense
more holistic view. Marketing scopeautomotives, appliances, aircraft,
is not only about customers, infrastructure, defence, etc. The country
but also the customers ecosystem, which means can harness its innate advantages too, such
the community in which the customer lives. as availability of raw materials, agricultural
Customers expect businesses to be socially expertise, and technological expertise. Also,
responsible too, taking into consideration all the India would be a good base to reach out to
entities (including the environment) affected other emerging markets in the regionsay,
by them and their activities. This is what Porter automobile companies could use India as a
advocated through his concept of shared value manufacturing hub and sell their products in
as opposed to shareholder value. The Tata Group Southeast Asia and West Asia.
is a good example of a company that has a social However, I strongly feel that although started
responsibility and a business responsibility. with manufacturing in focus, Make in India will
end up being more to do with serviceslegal
As an emerging market, where does India services, accounting services, risk management,
stand in comparison to China? and R&D, areas in which India is already
The Indian scenario necessitates almost eleven establishing itself as an important hub.
intermediaries between a producer and a * Breakout Strategies for Emerging Markets.
consumer. Too many middle men creates
several frictionsdelays, a lot of waste, lack of
economies of scale at each step, and thinning of
margins. The challenge is how to compress the
cycle from eleven steps to zero steps, or one or
two steps. Ecommerce is becoming the biggest
change agent in this respect because it does
away with middlemen and facilitates a one-step
distribution systemfrom the manufacturer to
the ecommerce firm to the consumer.
Compared to India, China and Russia have
better infrastructure and a better supply function.
India lags far behind, especially in terms of
physical infrastructure like roads and ports. Many
Dr Jagdish Sheth people talk about demographic dividend as Indias
is Charles H strength. But the fact is that the demographic
Kellstadt Professor dividend factor is true for the next generation.
of Marketing at the
Goizueta Business Now, we also have an ageing population; we are
School of Emory expanding on both sides. And aged people are set
University.
in their waysfood preferences, consumption

INDIAN MANAGEMENT FEBRUARY 2017 25

Democratising the
marketing approach
How will marketing evolve in a dynamic and challenging business environment?

DR RAHUL SINGH, BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY

26 INDIAN MANAGEMENT FEBRUARY 2017

 COVER
STORY

set-up of thinking, which is not design

thinking. Companies such as Apple, Google,
and Facebook have focused more on innovation
and marketing and have observed extraordinary
growth. In a quick survey by the author, the
respondents (informed users) could not spot
the product(s) of Facebook but they have been
using it and spreading it further. Facebook has
won the democratisation with engagement
of its customers adding great value; this is the
process of co-creation of value. For long, many
companies have wandered around marketing
their products than marketing the purpose
of the product and service to society. Many
top companies still do not rate marketing and
innovation as one of their priorities, but finance,
sales, production, etc. Perhaps, it is time to
review this again.

Evolution of thought
While strategy is changing and becoming a
common discussion than an elite club activity,
marketing is showing signs of moving from
a product approach to a utilisation approach
although the pace of change is delayed. The
marketing approach is already changing and
democratising with the dramatic pace of
digitalisation. A Gartner study on Digital

B
Marketing Spending Survey 2013 shows that
the annual spending on digital marketing is
ecause the purpose increasing, and 80% of the digital or marketing
of business is to technologists report to the marketing
create a customer, chief*. With the change of context from
the business the physical market towards e-market and
enterprise has slowly towards m-market (mobile market),
twoand only marketing approaches need a revised or evolved
twobasic understanding. Companies have a higher
functions: marketing and innovation Peter propensity to die as well as succeed in this era
Drucker made this thoughtful statement long of transformation. For sure, they may remain
ago. We have tested this school of thought stagnant for not more than a particular gestation
many times when we broke the bureaucratic period but it is difficult to estimate the duration.

INDIAN MANAGEMENT FEBRUARY 2017 27

Micromax improved the Given that the intelligence of
existing products and the marketing team is constant,
there must be something else
innovated new ones responsible for the failures of
to move on to higher these programmes and launches
bands and contributed which are not captured accurately;
to marketing through else, there is a need to review the
constant factor.
reverse branding.
Based on the examples and
evidences from the market, we
may categorise marketing approaches into
four groups:
P-marketing: When companies improve
their products from the existing product
categories and scale, they tend to improve their
marketing strategies in incremental mode,
like Nokia, Samsung, and Unilever did. This
approach may be referred to as P-marketing,
which is product based. This matures at a
threshold and kicks off innovation. Many
companies die in this approach as they grow
their brand ego to an unapproachable height.
C-marketing: Micromaxa technology
solution company to telecom service providers
in its prior avatarinnovated a product by
studying the needs of users in the remote areas
in India. The marketing features and language
was the outcome of the personal interactions
with users and the pilot of the product was a
marvellous success. Micromax improved the
existing products and innovated new ones to
move on to higher bands and contributed to
marketing through reverse branding. This
is C-marketing, which is consumer needs-
based marketing.
V-marketing: Facebook and Google gave new
assumptions to outline the marketing approach.
The former connected the world without selling
any product in exchange of money, and the latter
offered information without any exchange of
money. Both the ideas effected a revolution and
changed the way the marketing programme was
designed; and consumers of the digital era are
28 INDIAN MANAGEMENT FEBRUARY 2017
part of the value (V) creation process. This is
V-marketing where demand is a proxy or absent
on economic principles (exchange). However
value creation continues.
D-marketing: Democratisation of
marketing starts when products or services
meet the employee quotient of marketing,
ecosystem quotient of marketing, product
quotient of marketing, and consumer quotient
of marketing. Company employees, partners,
and stakeholders become great communicators
in the whole marketing design. The ecosystem
will include a large audience including the
media, consulting/research firms, academia,
and other market movers. The product will
include the physical and emotional aspects and
promises of the need; and brand ambassadors
and consumers will possess the soft powers of
the product/service which helps in creating a
reference network through formal and informal
feedback and expressions. Futuristic and needs-
based innovation, confidence in innovation and
utility, perception and critique, and real usage
of products or services make a complete picture
of the democratisation of marketing. Patanjali
Ayurved, a new company with many new
products and an umbrella brand, has used these
features to make the most of democratisation
which includes democratisation of marketing
too. In a second example, the marketing
strategy of Dabur is led by a corporate strategy
based on the Vision Cycle (VC) coupled with
consumer opportunities. Dabur also brings
in the experiences of all direct and indirect
channel partners as well as consumers. It has
not only managed to fend off challenges and
continued to grow, but also became stronger
by addressing the issues through a robust
marketing mix of the marketing Psproduct,
packaging, promise, and personality (different
than the usual).
Richard Bagozzi, in 1975, developed the
construct of marketing: exchange is a central
 EMERGING
MARKETS

addition to society in the form of corporate social

responsibility.
Brand Moving beyond corporations, we have already
Ambassador
and Consumer started receiving constructive signals from
Marketing social enterprises on their marketing strategies
Quotient that are no less than a large firm in their design
and implementation, but different in their
approach. They do not spend large amounts of
money but are able to co-create value based
on dire need, high purpose, and emotional and
Product Democratisation Ecosystem spiritual quotient; Genesys Works, Embrace
Marketing Marketing Innovations, Ignia, Jaipur Rugs, Narayana
Quotient of Marketing Quotient
Hospital, and Sankara Nethralaya are such
examples. These organisations have created most
innovative products and services challenging the
institutional structures of marketing and are one
Employee of the lowest priced and profitable too.
Marketing Companies can also learn democratisation
Quotient from the way countries market their tourism and
business. For instance, Singapore has trained its
taxi drivers and restaurant employees to treat
their foreign guests in a highly professional way
Values are core to high- concept in marketing, and talk to them in designed methods to exert
purpose institutions and and it may well serve as maximum influence. This is in addition to what
the foundation for that the government does at national and international
economic entities are elusive general theory of levels to market itself through various institutions
included in that space. marketing. Marketing has integrated with the Singapore Tourism Board
Democratisation ensures travelled a long journey with Marketing Group.
that these last long in an unchallenged approach, Values are core to high-purpose institutions
with minor modifications and economic entities are included in that space.
the journey.
though. American Marketing Democratisation ensures that these last long in the
Association formally revised journey. In the present context, democratisation of
the definition (and understanding) of marketing marketing will outline a design of the organisation
in 1985 and 2004, which spurred a scholarly that is moving from value exchange to value
debate. Dr Jagdish Sheth came up with the co-creation.This will also ensure an increasing
concept of the 4As of marketingacceptability, confidence in marketing as against a negative
affordability, accessibility, and awareness; each picture due to information asymmetry between
of these is divided into physical and emotional organisations and consumers and excessive weight
ABOUT THE AUTHOR variables, based on co-creation of value rather to sales. D-marketing would develop its own
Dr Rahul Singh is than as value creation or value exchange as metrics aligned with co-creation.
Associate Professor,
Birla Institute of the foundation of marketing. Michael Porter
* Key Findings from U.S. Digital Marketing Spending Survey,
Management proposed similar approach of shared values 2013, accessed at http://www.gartner.com/technology/
Technology.
as against the existing model with a little value research/digital-marketing/digital-marketing-spend-report.jsp.

INDIAN MANAGEMENT FEBRUARY 2017 29

The emerging reality
A Western approach to consumer research and marketing will fail you in emerging markets.

PIYUSH SHARMA, CURTIN UNIVERSITY

30 INDIAN MANAGEMENT FEBRUARY 2017

 COVER
STORY

institutional theory, transaction cost theory,

resource-based theory, and agency theory)
to highlight significant differences between
developed and emerging markets in the way
businesses are created and managed (Wright et
al. 2005). In contrast, marketing researchers have
lamented the obstacles and technical difficulties
in applying research techniques in less-developed
countries, for a long time (Boyd Jr et al. 1964).
With the recent advances in information and
communication technologies, including the
popularity of the internet, email, and social
media, marketing researchers and managers are
showing a renewed interest in exploring the
differences between consumers in developed and
emerging markets along with the challenges and
opportunities posed by these differences for both
local and foreign marketers. (Sharma 2011; Sheth
2011). A comprehensive review of literature on
a wide range of topics relating to consumers,
brands, and marketers in emerging markets
reveals the following major streams of research:
Comparative consumer behaviour: This

research stream focuses on how consumers in

emerging markets are different from those in
developed markets due to a variety of cultural
and socio-economic factors (Maheswaran

E
merging markets are those
lower income countries that are
using economic liberalisation
to trigger rapid growth in their
economic output; these include
developing countries in Asia,
Latin America, Africa, and the
and Shavitt 2014; Jones Christensen et al.
2015; Michaelidou et al. 2015; Morgeson III
et al. 2015). Most of these studies show that
consumers in developed and emerging markets
are significantly different from each other in
terms of their characteristics, values, attitudes
and behaviours, such as materialism, value-
consciousness, and price-sensitivity.
Comparative marketing strategy: This

Middle East and transition economies in the research stream explores the differences in the
former Soviet Union and China (Hoskisson et impact of marketing strategies in developed
al. 2000). Past management research has used and emerging markets, including advertising
diverse theoretical perspectives (for example, appeals (Zarantonello et al. 2014), product-

INDIAN MANAGEMENT FEBRUARY 2017 31

 Shutterstock.com
A stronger focus on market strategies (Wei et al.
emerging markets will 2014), use of the internet and
social media (Berthon et al.
thus help us push the 2012), loyalty management
theoretical boundaries of programmes (Kumar et al.
the marketing discipline, 2013), and the role of product
and also provide innovation (Sok et al. 2015).
Most of these studies show
significant practical
significant differences in the
benefits. way various marketing actions
and strategies affect consumers
in both the markets, possibly as a result of
differences in their marketing infrastructure
and consumer expectations.
Emerging markets perspective: In
this relatively scant research stream, a few
papers examine consumers and marketers
in emerging markets for who they are and
not necessarily compare them with those in
developed markets. These cover topics such
as emergence of a global cultural identity
32 INDIAN MANAGEMENT FEBRUARY 2017
(Strizhakova et al. 2012), role of country-
market characteristics (Bahadir et al. 2015),
growing importance of new middle-class
consumers (Kravets and Sandikci 2014), and
differences in attitudes towards local and
international brands (Tanusondjaja et al. 2015).
In this context, there is a clear need to
not only further extend but also develop a
conceptual framework to guide and structure the
rapidly growing research on the challenges and
opportunities faced by marketers in emerging
markets. Moreover, it is important for the future
of the marketing discipline that we reflect the real
picture of consumers and markets in emerging
economies because they represent a large share
of the worlds population as well as economic
growth. A stronger focus on emerging markets
will thus help us push the theoretical boundaries
of the marketing discipline, and also provide
significant practical benefits and managerial
implications (Burgess and Steenkamp 2013).

It is important for the More specifically, most
future of the marketing concepts and theories in
consumer research and
discipline that we reflect marketing strategy have
the real picture of been developed and tested in
consumers and markets developed markets and some
in emerging economies of these have been replicated in
emerging markets. However,
because they represent
this is a limited perspective
a large share of the because it colours our
worlds population. perceptions about emerging
markets as seen through
the cultural-institutional lens of the typical
Western context in which major marketing
journals and their contributors operate. This is
in stark contrast to the professional marketing
community and multinational companies who
are able to keep pace with the rapidly globalising
world economy, resulting in a regular exchange
of consumer and market knowledge from the
developed to emerging markets and vice versa.
Bahadir S Cem, Bharadwaj Sundar G, Srivastava Rajendra K.
Marketing mix and brand sales in global markets: Examining
the contingent role of country-market characteristics. Journal
of International Business Studies 2015.
Berthon Pierre R., Pitt Leyland F., Plangger Kirk, Shapiro
Daniel. Marketing meets Web 2.0, social media, and creative
consumers: Implications for international marketing strategy.
Business horizons 2012; 55 (3): 261-271.
Boyd Jr Harper W., Frank Ronald E., Massy William F., Zoheir
Mostafa. On the use of marketing research in the emerging
markets. Journal of Marketing Research 1964; 1 (4): 20-23.
Burgess Steven Michael, Steenkamp Jan-Benedict E. M.
Editorial: introduction to the special issue on marketing
in emerging markets. International journal of research in
marketing 2013; 30 (1): 1-3.
Hoskisson Robert E., Eden Lorraine, Lau Chung Ming, Wright
Mike. Strategy in Emerging Markets. Academy of Management
Journal 2000; 43 (3): 249-267.
Jones Christensen Lisa, Siemsen Enno, Balasubramanian
Sridhar. Consumer behavior change at the base of the
pyramid: Bridging the gap between for-profit and social
responsibility strategies. Strategic Management Journal 2015;
36 (2): 307-317.
ABOUT THE AUTHOR Kravets Olga, Sandikci Ozlem. Competently ordinary: New
middle class consumers in the emerging markets. Journal of
Piyush Sharma Marketing 2014; 78 (4): 125-140.
is Professor of Kumar V., Sharma Amalesh, Shah Riddhi, Rajan Bharath.
Marketing, Establishing profitable customer loyalty for multinational
School of companies in the emerging markets: a conceptual framework.
Marketing, Curtin Journal of International Marketing 2013; 21 (1): 57-80.
Maheswaran Durairaj, Shavitt Sharon. Issues and New Directions
University.
in Global Consumer Psychology. Journal of Consumer
EMERGING
MARKETS
Psychology 2014; 9 (2): 59-66.
Michaelidou Nina, Reynolds Nina, Greenacre Luke, Hassan
Louise M. Cross-cultural and cross-national consumer
research: psychology, behavior and beyond. International
Marketing Review 2015; 32 (3/4).
Morgeson III Forrest V., Sharma Pratyush Nidhi, Hult G. Tomas M.
Cross-National Differences in Consumer Satisfaction: Mobile
Services in Emerging and Developed Markets. Journal of
International Marketing 2015; 23 (2): 1-24.
Sharma Piyush. Country-of-Origin Effects in Developed vs.
Emerging Markets: Exploring the Contrasting Roles of
Materialism and Value-Consciousness. Journal of International
Business Studies 2011; 42 (2): 285-306.
Sheth Jagdish N. Impact of emerging markets on marketing:
Rethinking existing perspectives and practices. Journal of
Marketing 2011; 75 (4): 166-182.
Sok Phyra, O'Cass Aron, Miles Morgan P. The Performance
Advantages for SMEs of Product Innovation and Marketing
ResourceCapability Complementarity in Emerging Markets.
Journal of Small Business Management 2015.
Strizhakova Yuliya, Coulter Robin A., Price Linda L. The young
adult cohort in emerging markets: Assessing their glocal
cultural identity in a global marketplace. International Journal
of Research in Marketing 2012; 29 (1): 43-54.
Tanusondjaja Arry, Greenacre Luke, Banelis Melissa, Truong
Oanh, Andrews Taylah. International brands in emerging
markets: the myths of segmentation. International Marketing
Review 2015; 32 (6): 783-796.
Wei Yinghong Susan, Samiee Saeed, Lee Ruby P. The influence
of organic organizational cultures, market responsiveness, and
product strategy on firm performance in an emerging market.
Journal of the Academy of Marketing Science 2014; 42 (1):
49-70.
Wright Mike, Filatotchev Igor, Hoskisson Robert E., Peng Mike
W. Strategy Research in Emerging Markets: Challenging the
Conventional Wisdom*. Journal of Management Studies 2005;
42 (1): 1-33.
Zarantonello Lia, Schmitt Bernd H., Jedidi Kamel. How to
Advertise and Build Brand Knowledge Globally: Comparing
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INDIAN MANAGEMENT FEBRUARY 2017 33
34 INDIAN MANAGEMENT FEBRUARY 2017
It is important to acquire customers before selling a product.
SHIL NIYOGI, LEAN CUSTOMER MANAGEMENT
Engage first,
sell next
A
ccording to Geofrey
Moore, organisational
theorist, we have evolved
from systems of records
to systems of engagement.
The cycle times are
getting shorter because
companies are adapting faster, and those that
take time to adapt are losing out. Companies
that succeed today are those working towards
customer satisfaction and focusing on educating
customers, enabling them, effecting change, and
engaging them.
The lines between product development,
marketing, and sales functions are becoming
thinner, particularly with evolving minimum
viable products and different pricing
methodologies. What do you sellthe vision or
the manufactured product? Is selling a product
more important than acquiring customer
interest? With the changing priorities of
customers, keeping them engaged has become
the most important ingredient for success.
CUSTOMER
RELATIONSHIP
Four-E framework
The Four-E framework ensures that the
customer too gets value from the relationship.
This engagement enables a prototype to become
a minimum viable product and further evolve
to get to a maximum value point. To maximise
output from every customer interaction, there
are four key types of engagement components
or engagement interactions between the
entrepreneur and the existing/prospective
customer: educate, enable, effect, and engage.
Educate: Shows entrepreneurs how to
better understand customers and their unmet
needs. It also helps them educate patrons about
new products planned by the organisation, and
gather meaningful feedback from clients.
Enable: By enabling prospective customers
to know more about products and their uses,
entrepreneurs incrementally prepare them
to make a decision. Continued enabling helps
them get closer to the needs of the customers.
It allows them to test whether their business
can provide the public with what they need in
INDIAN MANAGEMENT FEBRUARY 2017 35
The easiest way to grow a manner and at a price that
your business is to not work for both.
Effect: This aspect focuses
lose your customers on an entrepreneur identifying
and prospects. whether his firm is helping
the customer or not. Are the
product functionalities or delivery standards
meeting key unmet needs? Is the product
bringing any value to the customer, and if not,
how can it be changed?
Engage: Staying engaged with the client
before the sale and beyond it are crucial
for creating and sustaining a solid business
relationship that can lead to more sales and
good word-of-mouth publicity.
Engaging zone
The easiest way to grow your business is to not
lose your customers and prospects. The cost of
losing customers is staggering, but few businesses
truly understand the implications.
Traditionally, we had assigned more
importance to sales; and subsequently, metrics
were crafted around tracking sales growth.
However, modern entrepreneurs understand
that one sale is not enough and that an engaged
customer base is the key need. It is the only
way to grow the business consistently and
Shutterstock.com
increase the lifetime value of customers.
Engaged prospects and customers are also a
target group for entrepreneurs to test any new
idea or minimum viable products (MVP). As
a result, modern day entrepreneurs are ready
to go the extra mile to create value and engage
prospective customers by giving them freemium
type services or try-and-buy products.
The engaging zone is where entrepreneurs
and their customers create value for each other.
The educator finds out what the customers
really value. The enabler builds the product,
prices it, and distributes it per the findings. The
effecter closes major sales contracts as well as
assesses whether the product still provides the
value customers were looking for. The engager
provides other solutions to help close any
value gap or address a new need. This cycle of
educate-enable-effect-engage continues with
the engaged customer. For customers to remain
engaged, entrepreneurs should constantly assess
the value that both parties are getting out of
the relationship. With the engaged customer,
educators identify other unmet needs and new
priorities. To bring more value, they also reveal
some of the new products the entrepreneurial
firm is working on. Subsequently, enablers and
effecters play into the relationship not only to
monetise immediate transactional opportunities
but also to increase the lifetime value of
these customers.
Let us look at a swimming pool analogy.
When an entrepreneur educates prospects,
he gathers the dimensions of the pool from
them. When the entrepreneur enables them,
he actually builds the swimming pool with
the dimensions gathered. When he effects the
change, he attracts people into the new pool.
And when he engages with them he keeps the
patrons entertained.

How can a company attain value fast?

The customer-engaging entrepreneur needs
to take value creation to new heights, through

36 INDIAN MANAGEMENT FEBRUARY 2017

 CUSTOMER
RELATIONSHIP

new customers and retain them in the engaging

zone, in the most seamless way.

How does product lifecycle get impacted by

lean customer engagement?
During the introduction phase of the product
lifecycle, the activities are focused on raising
awareness about the new product and seeking
early adopters. In the growth phase, marketers
activities help expand the market in the same
segment or in new segments and geographies.
When a product reaches its maturity phase,
the marketing activity and expenditure levels
get lower than earlier in the lifecycle, as the
product sells itself due to the established
brand and relationships. When the product is
Shutterstock.com

in its decline phase, its existing reputation and

customer loyalty produce revenues but there is a
gradual disinterest. Marketing teams often tend
to put either too few or too many resources in
this phase. They do not consider development
When the product is in its better procedures, and build of a profitable replacement product or an
decline phase, its existing competencies to support that. extension of the existing product line to cover
It requires entrepreneurs to new customer interests and changed priorities.
reputation and customer revisit their way of conducting In all this, the traditional entrepreneur does
loyalty produce revenues business and identifying the not look at increasing the lifetime value of
but there is a gradual engaging zone. This will customers by keeping them engaged throughout
disinterest. also help them to look for this cycle.
opportunities in adjacent Now let us see how the Four-E framework
categories, or new value keeps the customer engaged through the
pockets in existing competencies. product lifecycle. Educators can help in the
Educators can help identify insights about introduction phase of the product lifecycle, as
customers that in turn drive marketing and sales that is when the entrepreneurial firm seeks ideas
decisions. Enablers can help build efficiency as well as builds product awareness. Enablers
to deliver the right product efficiently in a expand the market and make the product usable
way the customer wants. Effecters can help by more prospects, during the growth phase of
extend necessary competencies to increase the product lifecycle. When a product reaches
value for customers. Engagers can use these its maturity phase, the effecters assess gaps in
ABOUT THE AUTHOR newly developed competencies to improve how the value created for the customer and address
Shil Niyogi is customers are served and how they get the best that. In its decline phase, the engagers keep
Senior Director, possible experience, across all product lines the customers in the engaging zone and help
Product
Engineering, at a and services. them with other products (or better
healthcare firm All these facets, when combined effectively, version of the same product) through the
in Chicago.
within the entrepreneurial firm can acquire engaged relationship.

INDIAN MANAGEMENT FEBRUARY 2017 37

38 INDIAN MANAGEMENT FEBRUARY 2017
Charting a road map for financial services KPOs in India.
DR NITIN BALWANI, IFIM BUSINESS SCHOOL CASE
STUDY

A change
of course
F
inancial market KPOs started
with a lot of fanfare, but lost sheen
over a period of time due to the
impact of various market forces.
More importantly, what they
considered as their competitive
advantage proved to be their
nemesis. The need of the hour is for KPOs to
reinvent themselves and become relevant again.
The availability of a large talent pool
engineers, post-graduates, MBAs, CAs, PhDs,
lawyers, and doctorsat salaries that are
only a fraction of those in the western world
makes India an ideal location for setting up
a back office for the services industry. The
influx started with IT services (primarily body
shopping) as demand exploded, moved on to
Business Process Outsourcing (BPO), and then
moved up the curve to Knowledge Process
Outsourcing (KPO).
With the collapse of financial markets came
the first shock, as big banks and investment banks

INDIAN MANAGEMENT FEBRUARY 2017 39

 SALARY COMPARISON FOR EXPERIENCED RESOURCES Rise of the financial services KPO
As the US financial services market exploded
in the early 2000s, it generated a heady mix of
demand for professionals. Salaries went through
India the roof and attrition rates reached unforeseen
Australia levels. Financial services businesses in the US
started looking at other markets that could satisfy
Singapore
their needs and India figured high on the list.
Canada India, by then, was already a preferred
South Africa destination for IT and ITeS services. Most
large investment and retail banks were already
Ireland making susbstantial saving by outsourcing their
Wales services to India. The delivery capabilities were
Low Moderate High
well known in other spheres as also the pain
points. In fact, some of them had already set
Source: Adapted from KPMG / Swamy and Associates, Knowledge Process Outsourcing, February 2008
up their back offices in India to support their
international offices.
PIPELINE AVAILABILITY OF TALENT While it was one thing to let the back office
or support services be run from India, it was
an entirely different matter to have customer-
facing high-end operations being run from a
India remote location. The financial marketssupport
Australia required advanced analytical and technical skills
Singapore
to complement the market skills of professionals.
There was no surety that India would be able
Canada to supply the same. The initial outsourcers
South Africa were mostly Indians, who knew talent was
Ireland abundant in the country. Their business success
became showcase examples for others to follow.
Wales
It helped that a few of the people who were
Low Moderate High
earlier working in international offices of these
investment and retail banks set up companies
Source: Adapted from KPMG / Swamy and Associates, Knowledge Process Outsourcing, February 2008 here to run the show. They spoke a familiar
language, were accessible, and had references
who could vouch for their work.
The business case was impeccable. Significant
crumbled. Business became a single industry/ cost reduction, command of English language,
segment driven and growth became difficult. 24x7 support, little or no upfront investment,
Seeing the writing on the wall, several companies flexible and ample supply of professionals
sold out. Others are waiting to either branch that can be increased or decreased as the
out or sell, with no buyer in sight. The future business demandedall worked in favour of
roadmap is hazy and fraught with challenges. The the outsourcing to India. These positives were
path these financial services KPOs should take is more than enough to counter the negatives
a matter of debate. of data security (that companies were quite

40 INDIAN MANAGEMENT FEBRUARY 2017

 CASE
STUDY

The 2004-2008 period finicky about), talent retention control over the operations and ensure their data
were sunshine days for (outsourcing companies were security needs are met. Organisations that took
willing to bear the cost of the captive route included Citibank, BNY Mellon,
the financial KPO industry replacement), and quality of HSBC, UBS, Credit Suisse, etc.This still allowed
in India with growth work (only basic work was several third-party players to flourish and grow,
touching 100-300% YoY. outsourced). including Evalueserve, AMBA Research, Copal
Evalueserve was an early Partners, Irevna, etc., to name a few.
entrant on the scene. It was established in 2000, The business was basic data entry in the
closely followed by Irevna Research in 2001. This initial phases but scaled up on the value curve
was followed by Copal Research in 2002, AMBA to include highly sophisticated modelling and
Research in 2003, and Adventity in 2004. Apart analytical work, over the years. The gamut of
from these, several other small and specialised services offered was huge and expanded in a
companies set up shop to cater to a single client short span of time.
or a handful of them and offered niche services. As the complexities of the work grew, the
There were a few organisations that outsourced expertise requirement grew exponentially. To
and were happy doing so while others saw merit in find a resource that could develop a detailed
setting up their own captive centres to have more financial model and write an equity research
report on a company that is 10,000 miles away
with little access to management and the markets
FINANCIAL SERVICES KPOS VALUE PROPOSITION required considerable skills. Skills that are
not easy to teach or develop in a short span of
Value Drivers Concerns time, unlike updating a financial model, which
Unreliable data security especially with is easy and can be taught in a matter of days.
Large availability of well quali-
1
fied and trained professionals
smaller vendors; unethical practices KPOs got around this by paying fancy salaries to
related to handling of crucial data experienced resources that could then be trained
English language Rising wages and attrition of trained fast to focus on international markets,
2
proficiency personnel and achieve the desired level of efficiency to
Supply shortage of profession- Inadequate intellectual property rights satisfy international clients.
3
als in developed countries protection The 2004-2008 period were sunshine days for
Well-established outsourcing
the financial KPO industry in India with growth
Shortage of high-level skills, limiting touching 100-300% YoY; a significant rise in
4 practices evident from IT
the work scope to basic support
services and BPO sectors salaries and profiles were the order of the day.
Lack of growth and cross Business was flowing faster than the KPOs could
Supporting government
5 employability reducing the supply of recruit and train. Enough talent was not available
policies
skilled people to the KPO sector
with the right focus on analytical skills and an
Adherence to quality eye for detailthese two aspects put off clients
High cost of training and retention
6 standards and data security
requirements
issues in the developed world. People with 3-5 years
Tendency to lose the most
of experience were leading teams of 50-100
7 Reasonable billing rates professionals, most of them fresh out of college,
experienced employees to clients
Time zone advantages; trying to take care of an almost unsatiating
8 organisations can run their demand for support. The business was reference
business 24x7 driven and the clients were chasing the sales
9
Scope of expansion into relat- team, rather than the other way around. Pricing
ed areas like data analytics was top of the line at the time with $60,000 per

INDIAN MANAGEMENT FEBRUARY 2017 41

SERVICE OFFERINGS OF FINANCIAL SERVICES KPOS
Domain High Complexity
Insurance and actuarial Company valuation
Profit/capital management
Capital adequacy/solvency
calculation
Long-term liability modelling
Integrated reserving and pricing
Moderate Complexity Low Complexity
Customer domain and distribution Product and channel
channel analysis profitability analysis
Claims modelling and estimation
Asset/liability modelling
Expense analysis and benchmarking
Product line projections

Product design, profit testing Discounted cash flow modelling

Equity research and Preparation of thematic industry Presentations and profile tem-
New company initiation reports
investment banking reports plates for institutional investors

Creation and support for mergers

Presentations and pitch books for Update and maintenance of
and acquisitions (M&As)
institutional investors product models
standalone valuation models

New idea generation Valuation models Update of valuation models

Market research for fixed interest, in-
Corporate credit, structured
Feasibility analysis dex linked, credit interest rate swaps Presentation and graphics
and project finance
and asset backed markets
Library, knowledge management,
Cash flow modelling
and general research

Credit quality analysis

Loss protection calculation
Stress testing
Scenario modelling
Fair value reporting
Asset-pool performance
Market research and
Product profitability analysis Budgeting analytics Competitor analysis
internal support
Framework development GAAP reporting support Sector analysis
Shareholder return analysis SOX 404 support Market research support
Capital management analytics Activity based costing
Risk management support
Strategic customer or domain
Retail banking Fraud analytics Documentation support
analysis
Delinquency analysis Product marketing support
Attrition modelling Mortgage underwriting
Propensity modelling
Product profitability analysis
Credit scoring
Underwriting algorithms

Source: Adapted from KPMG / Swamy and Associates, Knowledge Process Outsourcing, February 2008

42 INDIAN MANAGEMENT FEBRUARY 2017

 CASE
STUDY

analyst on an average in 2005, which was still at Global investment banks realised that their
a 50% discount on the price that would be paid captive units were not strategic and were only
onshore for someone equipped with similar skills. supporting their select global operations (some
Significantly, the manpower cost was less than of which were already in the process of winding
30% of the billing rate even for an experienced down). This could have been easily monetised
analyst with 4-6 years of experience. Everything and there were instant cost savings that they
was going great for the business and then the could have had if they outsourced it. Global
financial crisis of 2008 happened. investment banks started selling their captive
units to Indian IT giants, promising them steady
Changing landscape led by financial crisis business and options to bundle both strategic
of 2008 and operating units of IT, BPO, and KPO
In hindsight, growth in financial services was operations. Lured by the incentives, TCS bought
driven by the greed for the global captive unit of Citibank in 2008 for
short-term profits from both $505 mn and Cognizant bought the Swiss Bank
With the credit crunch investment and retail banks. UBS Indian outsourcing arm in 2009 for
and business downturn This had also driven the need $75 mn. The deals not only helped Indian
happening, suddenly a lot for talent to manage the IT giants expand their services into financial
of people were redundant processes. With the credit domains but also opened up new pathways to
crunch and business downturn provide integrated financial, consulting, and
in the system. happening, suddenly a lot of technology solutions to the BFSI segment that
people were redundant in the was a major component of their portfolio. This
system. With losses looming at their face, most also allowed cross-selling of similar services to
of the retail and investment banks started looking their other clients, expanding their business and
at rationalising their operations and paring their cross-domain expertise.
cost base. This led to several effects, primary While the deals between captive units were
amongst them was reduction of workforce, fructifying, several independent outsourcing
both onshore and offshore, and disposal of companies realised that the business would
non-strategic units. remain tough and there was no point in them

Global KPO Industry-Projections vs Actuals

18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Actual Original Projection Revised Projection

Source: Evalueserve and Industry Sources

INDIAN MANAGEMENT FEBRUARY 2017 43

 continuing in it. Everyone started looking for
buyers, Adventity was sold to Sutherland Global
Services in 2010, Pipal Research was taken
over by CRISIL in the same year, and Moodys
acquired Copal Partners and AMBA Research
in 2011 and 2013 respectively. Each case was
justified on the basis of niche capabilities or
client base that the target had, something that
was difficult to develop on their own or sell
in the market without proper collaterals and
client testimonials. While some of them did
come with a top-notch client list or niche
capabilities, several were acquired just because
the promoters had decided to get out of the
game while they were still ahead and reasonable
valuation could be achieved.
The heady growth rates that were projected
at the start of the boom was moderated to an
extent. Even then, it was difficult to achieve
those projections as the global financial markets
moderated and every one of the investment/
retail banks was on a constant manpower-
reduction spree. There were banks who had
announced reduction in manpower five years
in a row and still continuing to shed divisions,
geographies, and manpower. All of this led
to significant manpower surplus (though not
with the requisite skills set) available across
developed economies, leading to a reduction in
Indian KPO Industry-Projections vs Actuals
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Actual
Source: Evalueserve and Industry Sources
44 INDIAN MANAGEMENT FEBRUARY 2017
growth rate in outsourcing as well.
These KPO growth rates were not of the
financial services KPOs per se but for the KPO
industry as defined loosely and included all sorts
of services (some were performed by financial
services KPOs and the rest were performed by
other entities). For example, Evalueserve has
service offerings ranging from financial services
to legal support and from market research to
analytics.
As the market exploded, the term KPO
also expanded to include other industries
and segments. It started to signify all kinds of
research and information processing, including
legal, intellectual property, medical services,
training, consultancy, research and development
in pharmaceuticals and biotechnology, and
data analytics, apart from financial services
constituents like investment banking, equity
research, credit research, and market research.
India was not the only market offering these
KPO servicesit was competing with other
markets on several fronts, primary among them
were the Philippines and China.
Challenges ahead
Years of low growth and mounting competition
by big players backed by global credit-rating
majors/captive units of IT majors have spelt
Original Projection Revised Projection
 CASE
STUDY

SERVICE OFFERINGS IN KPO DOMAIN

KPO Segments India Philippines China Russia New Zealand

Animation

Engineering services

Content development
Financial services
Healthcare
R&D
Legal
Pharma
Source: www.ibef.org

trouble for the small players. This is exacerbated
by the following factors:
Overdependence on a single line
of business
As most of the financial services KPOs are
in a single line of business, expansion into
they can dictate terms and have been asking for
their pound of flesh citing business pressures.
Discounts on billing rates, demand for higher
efficiency, and/or better qualified manpower is
common among peers.
Manpower availability

any other line requires a skills set that is not
available with them. Without this, a ready set
of client testimonials, and a sales team that can
reference and sell those services, it is difficult
to expand in any area.
Business growth
Dependence on a few clients has become a
bane as new clients are hard to come by and
existing clients are not in an expansion mode.
Replacement mode is quite active and so is
poaching others clients. Smaller vendors are
hit particularly hard as their average client
billing is small and need a lot more effort to
maintain and sustain.
Billing rates
The average billing rates have been either
frozen or are showing a downward trend.
ABOUT THE AUTHOR
Poaching by providing attractive billing rates
is a common practice and does not let anyone
Dr Nitin Balwani is
Dean, Planning and hike the rates easily.
Development, IFIM Client pressure
Business School.
Like the IT industry, clients have realised that
Every professional looks for career growth and
enhancement.While the billing rates have been
constant over the last few years and business is
in non-expansion mode, it has become difficult
to attract talent as the salary to billing ratio has
gone up drastically. Promotion avenues are also
non-existent as movement of senior people,
either within the industry or to other industries,
has been very slow.The choice is two-fold
either invest significantly in new lines of business
or sell the business.There is no third option,
is there?
NASSCOM Annual Strategic Review, 2015
KPO Growth Industry Impacted by Great Recession,
Evalueserve, August 2010
Captives in India - Is the Honeymoon over, Evalueserve,
November 2009
Knowledge Process Outsourcing, KPMG / Swamy and
Associates, February 2008
Indias Knowledge Process Outsourcing (KPO) Sector: Origin,
Current State, and Future Directions Evalueserve, July 2007
Knowledge Process Offshoring: A Win-Win Situation,
Evalueserve, May 2005
Growth of the Indian KPO Sector, Evalueserve, July 2004

INDIAN MANAGEMENT FEBRUARY 2017 45

46 INDIAN MANAGEMENT FEBRUARY 2017
Startups need to create infrastructure before advertising their products or services.

RAJIV JOSHI, INSTITUTE OF MANAGEMENT TECHNOLOGY,

NAGPUR. MARKETING

Think before
you leap
T
he co-founder of a startup
walked into my office and
discussed his plan to raise funds.
I asked him a simple question,
Why do you need investors
money? For marketing,
advertising, and brand building,
he replied. I knew the background of startups
they have more demand for their services than
their ability to serve customers. To the best of my
knowledge, this one-year-old startup had amassed
a good customer base. Its founders had built a
compelling value proposition and a sound business
model. What was then the compulsion to spend
on advertising?
This scenario is common in many ventures,
particularly those started by MBA graduates.
Business education equips them with the necessary
tools and techniques. Typically, they tend to
treat new ventures as miniature versions of large
corporations, which is not the case. Similarly,
corporate employees who turn entrepreneurs also
do not get it right. Steve Blanks idea that a startup
is not a smaller version of a large company is often
ignored while starting a new venture. Early-stage
startups differ significantly from large corporations
as well as heavily funded unicorns in terms of their
strategic approach, marketing, sales, and overall
management. Strategic priorities of these unicorns

INDIAN MANAGEMENT FEBRUARY 2017 47


and large companies are different from those of
startups which are in the process of achieving
product-market fit and building the initial
customer base.
The question is: do you really need to spend
on advertising? Let me make this point clear. I
do not deny its power to reach out to the masses
and its ability to shape consumer psychology.
However, startup marketing takes different forms
as compared to the marketing of an established
organisation. Their constraints and challenges
are different. The founders need to understand
the importance of customer equity over brand surface? Could the novelty of the idea and
equity. This shift in orientation from generating
awareness and building
perception to building a
Startup marketing satisfied customer base involves
takes different forms a mindset change.
as compared to the It is often said that a product
marketing of an which does not sell without
advertising will not sell with
established organisation. advertising. Usual methods
Their constraints and of advertising and brand
challenges are different. promotion are not found to
Shutterstock.com
be effective for startups. Here is a case in point:
SuperJam, a 100% fruit jam company was started
by Fraser Doherty. Instead of relying solely on
digital media and social networking, the company
organises and sponsors SuperJam Tea Parties
for elderly people who live in care homes. The
company tries innovative methods to market in
different markets and countries.
What does it take to cut through the clutter
and get noticed in the market? Is there anything
remarkable around the product being marketed?
How to build substance rather than just a shiny
innovation be the focal point? For example, in
recent years, Hector Beverages (PaperBoat),
Happily Unmarried, and Chumbak have achieved
this successfully. Indigo avoided expensive
advertising in the initial years and focused on
customer excellence. Starbucks was built as a
great company one cup at a time. It is critical
to build something remarkable in the product,
which gets noticed and serves as the base of
marketing. Paul Grahams simple advicemake
something people wantremains the core of

48 INDIAN MANAGEMENT FEBRUARY 2017


Customer acquisition is startup marketing. Have you
the key challenge in the achieved the product-market
fit? Can the right features be
early stages of venture the marketing point? In the
creation. Advertising may early stage of venture creation,
not be the only solution startups are looking for a
to this challenge. repeatable business model, and
mass advertising may adversely
affect their process of pivoting
from who they are to what they should be.
What is your conscious choiceprofitable
growth or fast growth? Startups need to decide
on the direction.Would they go for sustainable
profitable growth or prefer leveraged fast growth,
which might not sustain and lead to cumulative
losses. In the recent past, the risk capital was
tightened and investors are now moving to unit
economics-based metrics. Can your product
speak for you? Have you earned word-of-mouth
publicity? Have you created any communication
to generate virality? At times, below-the-line
(BTL) activities are suitable for assessing consumer
response on certain startup ideas. Is there any
certification which could be your marketing
tool? Direct and digital marketing work relatively
better for running experiments at the startup
stage. Startups that need to create market and
educate potential customers need more than just
traditional mass advertising.This is more applicable
for the consumer internet startups are looking at
altering the habits and building the stickiness of.
With respect to funding, a majority of the
startups are bootstrapped. At times, advertising
splurge straining the limited resources not only
affects the burn rate but also defeats the purpose.
And if the advertising works, do they have the
capacity to serve the leads generated through
ABOUT THE AUTHOR mass media advertising? Do you need those
Rajiv Joshi is few hundred customers to test your idea and
Associate Professor, iterate further or a few thousand? The question
Entrepreneurship and
General Management,
remainsshould you advertise before building
Institute of the critical mass? Even if you are a well-funded
Management startup, you may like to spend money on building
Technology, Nagpur.
product and team.
MARKETING
A product launch event is a great marketing
opportunity. How do you wish to build viralilty
around this event? The idea is to create a buzz
for the applicable segment, and this buzz
builds momentum gradually. How about using
testimonials, case studies, and white papers
as marketing messages? Would you like to
capitalise on the thought leadership of your
startup team? This is suitable for those targeting
B2B enterprise customers. Technology startups
could leverage the expertise of founders,
testimonials from lead customers, and thought
leadership marketed through white papers. Is
there any possibility to create a marketing idea
around your first customer or the set of first
customers? Can your startup story be a point
of marketing your startup? Have you crafted
the startup story? Marketers often use a well-
crafted story around the origin of the product,
entrepreneur, or the business idea as marketing
tool. It is a well-established fact that story sells
when it comes to marketing a product. Some of
the great brands which are reckoned with now
have capitalised on this.
Advertising is crucial. The question iswhen
is the right time for that? Do you really need
to spend on advertising? Startup marketing is
different. It is all about innovative marketing
ideas. Startups do not have any legacy issue
which confine their ideas to the market and
restrict them to few proven tactics. They can
experiment with innovative marketing ideas
which are beyond advertising and expensive
campaigns. Relatively, the cost of venturing
out is coming down but that of acquiring
customers is going up. Customer acquisition is
the key challenge in the early stages of venture
creation. Advertising may not be the only
solution to this challenge. Startup marketing
is different than the mainstream marketing. It
might sound similar in terms of the concept
but it is different while practising. It is not
just a functional approach. It is a well-thought
business strategy.
INDIAN MANAGEMENT FEBRUARY 2017 49
 BETWEEN
THE
COVERS

SUMMARY
G LAKSHMANAN ON
COMPETING AGAINST LUCK

EXTRACT
THE ESSENTIAL BOOK OF
CORPORATE GOVERNANCE

BOOKSHELF

MUST READ

50 INDIAN MANAGEMENT JANUARY 2017

 Shutterstock.com

INDIAN MANAGEMENT JANUARY 2017 51

 A guide for organizations to maximise wealth creation and build governance
best practices.
BOOK
EXTRACT

Governance,
a companys
backbone

T
he innumerable scandals
stemming out of the failure
of Corporate Governance,
which include downright
fraud and mismanagement
in many geographies, have
shattered the confidence of
the investors of resources in the basic fabric
of an enterprise as a JSC. An impression has
been gaining ground that those in the active
management by the virtue of the authority
vested in them, treat the interest of other
THE ESSENTIAL stakeholders with utter disregard, mismanage
BOOK OF the enterprise, siphon off the resources and
CORPORATE
GOVERNANCE even organize and undertake daylight robberies
Author: on the wealth of the stakeholders. The disgust
G N Bajpai emanates from the fact that such irresponsible
Publisher: behaviour is being reflected by those who are
SAGE India expected to be the trustees of the interest of all
ISBN: stakeholders.
9789385985218
Governance failures created an uproar in the
Pages:
364 financial markets, which made the governments
Price: and regulators sit up and take notice. There
R595 was a rethink on the role of the state, which

52 INDIAN MANAGEMENT FEBRUARY 2017

 is expected to provide basic support services
such as law and order, a conducive legal
environment, a decent and potent supervisory
and regulatory infrastructure, a reliable
accounting system, a vibrant securities market
Adrian Cadbury, CEO of the Cadbury
Confectionary empire.
Back home in India, the following committees
have been appointed:
Kumar Mangalam Birla Committee on

and so on, while the private economic agents Corporate Governance (2000)
carry on the economic activities. Even the Naresh Chandra Committee on Corporate

allocational efficiency of the resources by capital Audit and Governance (2002)

markets has been questioned. Discipline of N.R. Narayana Murthy Committee

capital markets itself came under severe attack. (SEBI, 2003)

It was felt that the rules and canons of market Naresh Chandra Committee Report of 2009

discipline were inadequate and even the existing
code of conduct was not effectively enforced.
This led to the formation of a number of
committees and commissions and enunciation
of codes around the world (noted amongst
those have been mentioned below), beginning
with the Cadbury Committee chaired by Sir
(CII Taskforce on Corporate Governance
formed post Satyam episode)
The corporate misdemeanours consequenced
by greed, hubris and delinquencies have incited
a global approach to bringing an order in
the management of enterprises, particularly
those which are publicly owned, where the

List of Committees and their Country

Sr.
Name of Committee Country/Organization
No
1 Sir Adrian Cadbury Committee on Financial Aspects of Corporate Governance (1992) UK
2 Mervyn E. Kings Committee on Corporate Governance (1994) South Africa
3 Greenbury Committee on Directors Remuneration (1995) UK
4 CaIPERSGlobal Corporate Governance Principles (1996) USA
5 Business Round Table (BRT)Statement on Corporate Governance (1997) USA
6 Hampel Committee on Corporate Governance (1998) UK
7 Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (1999) USA
8 Combined Code of Best Practices (LSE) (1998) UK
9 OECD principles of Corporate Governance (1999) OECD
10 CACG Principles for Corporate Governance in Commonwealth (1999) Commonwealth Secretariat
11 Derek Higgs Committee (2002) UK
12 Sarbanes Oxley Act (2002) USA
13 Kumar Mangalam Birla Committee on Corporate Governance (2000) India
14 Naresh Chandra Committee on Corporate Audit and Governance (2002) India
15 N.R. Narayana Murthy Committee (SEBI, 2003) India

INDIAN MANAGEMENT FEBRUARY 2017 53

 BOOK
EXTRACT
Corporate Governance number of shareholders is
mirrors the companys large and widespread and has
a complement of minority
integrity, efficiency and shareholders. The orderly
long-term growth. management of an enterprise
has been christened as
Corporate Governance.
Many pundits in the field have defined
Corporate Governance in many ways and
it ranges from managing and maintaining
financial health of an enterprise to including
optimal wealth creation, maximizing wealth
management and most efficacious sharing of
wealth amongst all the stakeholders.
Innumerable definitions of Corporate
Governance have been laid down by the various
committees, commissions and organizations.
The excerpts from some of the definitions could
be described as follows:
The system by which companies are directed
and controlled by Cadbury Committee, 1992.
The relationships among the management,
Board of Directors, Controlling Shareholders,
minority shareholders and other stakeholders,
states International Finance Corporation (IFC),
Washington.
The Organization for Economic Cooperation
and Development (OECD) defines Corporate
Governance as:
involving a set of relationship between a companys
management, its board, its shareholders and other
stakeholders. Corporate Governance also provides the
structure through which the objectives of the company
are set, and the means of attaining those objectives
and monitoring performance are determined.
Good corporate governance should provide proper
incentives for the board and management to pursue
objectives that are in the interests of the company
and shareholders and should facilitate effective
monitoring, thereby encouraging firms to use resources
more efficiently.
According to the World Bank, Corporate
Governance is:
54 INDIAN MANAGEMENT FEBRUARY 2017
Blend of law, regulation and appropriate
voluntary private sector practices
Which enables the corporation to attract
financial and human capital, perform
efficiently, and
Perpetuate itself by generating long-term
economic value for its shareholders,
While respecting the interests of stakeholders
and society as a whole.
A complex definition has also been provided
by the advisory board of the National Association
of Corporate Directors (NACD), NewYork:
Corporate Governance ensures that long-term
strategic objectives and plans are established in
place to achieve those objectives, while at the same
time making sure that the structure functions to
maintain the corporations integrity reputation,
and responsibility to its various constituencies.
In one of the many books published since
1992, the Corporate Governance consists of
five elements, which the BoD must consider:
Long-term strategic goals
Employees: past, present and future
Environment/community
Customers/suppliers
Compliance/legal and regulators
Taking a world view of the definitions, I
would like to sum up Corporate Governance
as the philosophy that a company practises in
its relationships with its shareholders, lenders,
employees and other stakeholders, including
society at large. It mirrors the companys
integrity, efficiency and long-term growth.
Corporate Governance must assure the
investors and lenders alike that the companys
dealings with its stakeholders will be fair and
transparent, the CEO and the BoD will be held
accountable, the company will be responsible in
its business transactions and will create wealth
optimally, maximize wealth substantially and
share wealth efficaciously.
Excerpted with the permission of Sage Response from
The Essential Book of Corporate Governance. Copyright 2016.
GN Bajpai. All rights reserved.
 th
12 Global
Advanced
Management
Programme
Disruptive Innovation &
Open Business Models
in the Changing Global
Landscape

25 June to 01 July, 2017

at Silicon Valley, USA.

Programme Director
Solomon N Darwin
Executive Director, Center for Corporate Innovation
Haas School of Business, University of California,
Berkeley

Programme Framework
i Class Room Lectures and Interactions
ii Keynotes by Silicon Valley Startups and CEOs
iii Visits to companies like Google Tesla Motors Standard Chartered Bank Intel Cisco Systems Inc
IBM Research PayPal VISA GE Co-Innovation Lab Stanford Medical Centre Wells Fargo Bank
Kaiser Permanente UC Berkeley Campus amongst others

Programme Certificate
Upon the successful completion of the programme, participants will be conferred a Global Advanced Management Programme.
Certificate awarded by All India Management Association

Participation Fee
Delegate Fee per participant: INR equivalent to USD 8500 per Participant
Inaugural Discount: USD 750 per participant for registrations received along with participation fee by 31st March, 2017.
Early Bird Discount: after 31st March, 2017 a discount of USD 500 per participant available for registrations received along with
participation fee by 05th May, 2017.

Nitin Saxena
All India Management Association, Management House, 14 Institutional Area, Lodhi Road, New Delhi - 110003
Tel: +91 (11) 43128100, 24645100, Extn.-528. Mob: +91 9811675559 | Fax: +91 (11) 24608503 | Email id: nsaxena@aima.in
Website: www.aima.in
 Understanding customer jobs and not customers drives innovation.
G LAKSHMANAN, INFOSYS
BOOK
SUMMARY

Predictable
innovation

D
ata shows that for every Harvard Business Reviews best article, and the
seven innovation projects cofounder of four companies. He has twice been
(product/service), four named the worlds most influential business
enter the development thinker by Thinkers50.
stage, two are launched,
and only one succeeds. The theory of jobs
Why is innovation so The legendary economist Theodore Levitt
difficult to master? saidPeople dont want to buy a quarter-inch
For many companies, innovation is still hit drill. They want a quarter-inch hole!
or miss. Most managers follow one or more The authors primary premise is customers
of these in their quest to innovate: product do not buy products or services, they pull them
attributes (the features, the technology, and the into their lives to make progress. Clayton calls
ABOUT THE AUTHOR
bells and whistles), customer characteristics this progress as job to be done. Understanding
G Lakshmanan is (the demographicsdo we have an offer for customers does not drive innovation success, he
Senior Principal,
Infosys Limited. digital natives?), trending data (do we need a argues. Understanding customer jobs does. Let
gluten-free product?), or competitive response us look at a few of the ideas with examples.
COMPETING AGAINST (those guys have one, we need one too).Yet, the
LUCK: THE STORY failure rate is high. Progress, not products
OF INNOVATION AND How to avoid the frustration of hit-and-miss Successful innovations enable a customers
CUSTOMER CHOICE
innovationleaving the fate to luck? desired progress, resolve struggles, and fulfil
Author:
Clayton M Christensen, In Competing Against Luck:The Story of Innovation unmet expectations. In many innovations, the
Taddy Hall, Karen Dillon, and Customer Choice, Clayton Christensen and focus is often entirely on the functional or
and David S Duncan his co-authors offer a unique technique on how practical need. But in reality, consumers social
Publisher: companies can develop and market products and and emotional needs can far outweigh any
Harper Business
services that customers actually want and need. functional needs.
Pages:
288 (Hardback) Clayton Christensen is a professor at Harvard For example, BMW had long described itself
Price: Business School, author of eleven books, as being in the business of high performance
R599 five-time recipient of the McKinsey Award for cars. But with the auto industry in a

56 INDIAN MANAGEMENT FEBRUARY 2017

nosedive at the start of the 2008 recession,
BMWs leadership team took a step back
to assess consumer behaviour. What they
found changed the companys view of the
competitive landscape. BMW was competing
with traditional luxury cars, but it was also
competing with Tesla (Electric -Green fuel
efficient), Uber (ride hiring) and Zipcar (car
rental). BMW started benchmarking outside
their category and realised the real job was
efficient mobility. That led not only to the
launch of the electric and hybrid lines of BMW,
but also to BMWs DriveNow service.
Purpose brand
When people have a need, there is a job to be
done. Innovative companies focus on developing
products that do the jobs customers want, no
matter what form they take.
That is the reason why the names of some of
the most successful companies have become
synonymous with the job they help doXerox
(I need 2 Xerox copies), Google (Just
Google it) are cases where names (nouns) have
become verbs.
I need to furnish my apartment tomorrow.
Is there a brand (purpose brand) that pops into
peoples mind when they realise that is the job
to do? Over 95% of them say Ikea (Swedish
multinational). Ikea exists to do a jobfurnish
the apartment quickly. Nobody could copy Ikea
in the last 50 years.
The authors cover a number of techniques
such as integrating around a job, how to hear
what customers do not say, and identifying ways
to compete against non-consumption.
This book helps look at innovation with
different perspectives, different competitors,
different priorities, and most importantly,
taking the uncertainty out of the innovation.
INDIAN MANAGEMENT FEBRUARY 2017 57
 BOOK
SHELF
Top management must-reads
Legacy of Wisdom
Author: Gabrielle V Taylor
Publisher: Taylor Strategy
Partners LLC
Price: R799
The author takes the
readers on a journey
into the development of
wisdom, and the path
of that legacy through
generations, as seen
through the lens of a
profound relationship
between a grandmother
and granddaughter. The
book gives a look at what
the word wisdom truly a turnaround is possible.
represents. The world's
greatest thinkers and the
world's greatest grandmas
are on the same page when
it comes to the impact of
applied wisdom in our
lives. Those two worlds
now come together in
Legacy of Wisdom.
58 INDIAN MANAGEMENT FEBRUARY 2017
Rise Like a Phoenix:
Scripting Corporate
Turnarounds
Author: Pradip Chanda
Publisher: SAGE Publications
Price: R395
When ailing companies
are on the brink of
collapse, the owners are
faced with the question
whether a turnaround
effort is worth shedding
their blood, sweat or
tears for. The employees,
the labour union and the
ancillary units believe that
L&T and BPCL have in
The shareholders and
the lenders are sceptical
about allocating further
funds and resources. This
book explains how smart
managers unlock the value
of hidden or neglected
assets to successfully turn
basket cases around. the rest.
Win-Win Corporations: Deep Work: Rules for
The Indian Way of Shaping Focused Success in a
Successful Strategies Distracted World
Author: Shashank Shah Author: Cal Newport
Publisher: Penguin Random Publisher: Little, Brown Book
House Group
Price: R499 Price: R399
Why did Ratan Tata decide The book talks about
to pay for all the victims how professionals of
of 26/11 whether injured today have started valuing
in the Taj or anywhere quantity over quality, and
else? Why did HDFCs how this has turned them
Aditya Puri insist that into puppets who try
employees leave for home to indulge in extensive
by 5.30 p.m.? What do multitasking, dealing
Taj Hotels, HDFC, HUL, with multiple emails and
projects. Newport uses
common? Each of these principles of psychology
companies has exceptional and neuroscience
practices when it comes to while explaining how
stakeholder management. to improve a persons
This book gives an inside cognitive abilities and
look into what motivates how employers should
exceptional companies and encourage workers to
how they are a cut above not take shortcuts for
completing projects.
 3rd National Leadership Conclave
The New World Order: Will Asia Dominate the Next 10 years?

22 23 March, 2017 : Hotel Taj Palace, New Delhi

All India Management Association has helped Indian enterprises to adapt to changes through the past six decades and it continues to
be thought leader in bringing about change in leadership vision and strategies. It has set up the National Leadership Conclave as a
platform for Indias leaders from the government, business and intelligentsia to deliberate on the most urgent issues facing the country.
This edition of the Conclave aims to assess the countrys preparedness as part of an economic modeling exercise to forecast global
economic trends over the next 10 years.

The conclave is being chaired by Sanjiv Goenka, Past President, AIMA and Chairman, RP-Sanjiv Goenka Group

Eminent Speakers Include

Jayant Sinha Amitabh Kant R C Bhargava Ritesh Agarwal

Minister of State of Civil Aviation,
Government of India
Sunil Kant Munjal
President, AIMA & Chairman,
Hero Corporate Service Ltd
T V Mohandas Pai
Senior Vice President, AIMA &
Chairperson, Manipal Global
Education Services
Harshavardhan Neotia
Vice President, AIMA &
Chairman, Ambuja Neotia Group
CEO, NITI Aayog
A S Kiran Kumar
Chairman ISRO & Secretary DOS
D Shivakumar
Chairman & CEO India Region,
PepsiCo India Holdings Pvt Ltd
Sanjeev Bikhchandani
Founder and Vice Chairman
Naukri.com
Vanitha Narayanan
Chairman, IBM India Private Limited
Non-Executive Chairman Founder and CEO, OYO Room
of the Board, Maruti Suzuki India Ustad Amjad Ali Khan
Limited Sarod Virtuoso & Composer
T V Narendran Amaan Ali Bangash
Managing Director Sarod Master & Composer
Tata Steel India and South East Asia
Ayaan Ali Bangash
Vir Sanghvi Sarod Master & Composer
Print and Television Journalist &
Manish Singhal
Columnist
Founding Partner, Pi Ventures
Vipul Parekh
Co-Founder, Big Basket

For more details please contact: Surajit Bit, Deputy Director CMD
All India Management Association, Management House, 14, Institutional Area, Lodhi Road, New Delhi 110003.
Tel: +91-11-2460 8511, Fax: 011- 24608503, Email: sbit@aima.in, www.aima.in
 A thorough guide to understand, design, and implement competency models.
MUST
READ
Square peg, round hole?
The Handbook of Competency Mapping is a hands-
on book that a large number of professionals
have been using for developing competency
frameworks and aligning them with various
HR functions. As we know, competency is a
specific behaviour, knowledge, and motivation
an employee must demonstrate in order to
be effective in a given job or role. They form
the foundation for building effective human
resources systems and help HR managers hire,
assess, promote, train, develop, and manage
people against consistent criteria that are
relevant to the role and the organisation.
By understanding the competency model
for a position or organisation, an employee
becomes aware of the outputs/products/
services delivered through the position and
has a destination for a learning process.
Competency models are a viable tool for
preparing the present and future workforce, and
retain skilled incumbent workers to meet job
requirements and other needs of employers.
The previous edition of this book focused
on the how, what, and why of understanding,
designing, and implementing competency
models. However, during various consultancies
THE HANDBOOK
and training assignments, the author observed
OF COMPETENCY that professionals keen on developing the
MAPPING competency framework face numerous
Author: challenges. This edition aims to help managers
Seema Sanghi address those challenges.
Publisher: One such challenge is the process of
Sage
identifying the right word for competency
Pages:
344 (Paperback) and behaviour indicators, and writing the
Price: competency framework. This edition has a
R550 comprehensive list of more than 275 generic
60 INDIAN MANAGEMENT FEBRUARY 2017
competencies across all functional and
behavioural competencies. This will be helpful
for those who want to develop a framework
for their organisation. This will also be useful
to develop interview forms, questions,
training-need identification questionnaire, and
performance appraisal forms.
Another challenge is identifying commonly
used models on which organisations can
develop a customised framework. Competency
model for HR, generic competency model for
leadership roles, leadership competency model
for the automobile industry, and competency
framework for academic institutions have
been included or revised in this edition.
Competency-based interviewing is an important
tool not only for the assessment centre but also
for selection. The new chapter on competency-
based interviewing will be useful for both
professionals and those who are part of the
selection panel.
Competency mapping is essential
for organisations to deliver superior
performancewhat gets measured gets focus
and improves, what gets improved gets superior.
Competency frameworks, when done well,
increase clarity on performance expectations
and establish a clear link between individual and
organisational performance.
It has been realised that while borrowing
available models might be a good starting point,
customisation is necessarysooner or later,
ones own model has to be developed. This
new edition will help professionals develop
competency mapping and assessment
centre assignments.
 Global ideas and insights. Latest trends, opinion, and practices. Innovative thinking from
international gurus. In-depth case studies and more. Backed by the prestigious All India
Management Association, its what leaders in India read to succeed.

download your digital issue now

Available on: iPad, iPhone, iPod touch and Android devices

Subscribe through Magzter, the Digital Web Store, on iTunes and Android Market
www.spentamultimedia.com | on ipad at magzter.com
62 INDIAN MANAGEMENT FEBRUARY 2017
Companies should nurture a culture of two-way communication, where both
employees and leaders can engage in open discussions.
ABHIJIT NIMGAONKAR, ZS ASSOCIATES
Listen to
everyone
F
eedback, in any system or
organisation, forms the most
essential element of growth
and establishes the base for
continuous improvement. A
work culture that welcomes
feedback as a way of life creates
more opportunities for collaboration, builds
trust, and most of all generates fresh ideas. One
of the best forms of feedback is guidance since it
is based on mutual respect, confidentiality, and
trust. Organisations are increasingly recognising
the importance of how people achieve their
goals, not just what they achieve.
Every firm aims for a culture that engages
people and reflects the firms values. At
ZS, a consulting firm born from academic
roots, continuous feedback is part of the
DNA, boosting employee satisfaction,
productivity, and creativity. It is natural for
people then to feel involved and identify with
their organisation.
WORK
CULTURE
Regular feedback is what appeals to
millennials the most. Given that this generation
is proactive, eager to learn continuously, and
loves to offer ideas, they need seniors and
leaders who take the time to converse on equal
terms. It is important to reverse the dialogue
from go ahead with this to do you think this
is the right thing to do? Communication is a
two-way street.
It is crucial for firms to make individuals
aware of their potential as future leaders. Quite
a few organisations have a reverse mentoring
model in place, whereby the mentoring roles
are flippedpositioning a young professional
as the mentor and the seasoned professional
as the mentee. This helps employees engage in
conversations by taking the lead and thinking
ahead, which in turn boosts confidence and
enables them to see themselves as future leaders
in the firm. At ZS, for every new employee,
a mentor is assigned for the first six months,
someone who has preferably been in the
INDIAN MANAGEMENT FEBRUARY 2017 63
 WORK
CULTURE

Regular floor connects are also organised,

wherein senior members of the firm not only
interact with employees on a specific floor
and share updates, but also take questions and
hear important updates and ideas from those
present. Keeping track of what is happening
beyond project work and staying updated can
help one innovate and even think of new ideas
to accomplish routine tasks. Such practices help
build camaraderie across areas of work and firm
levels, too.
Finally, establishing transparency and open
Shutterstock.com
communication in the performance review
process plays a crucial role in trust-building,
productivity, retention, and overall progress.
At ZS, the review and appraisal process is based
on a competency model, which moves away
from the traditional bell curve. This model is
Team leaders need to same role before and could embedded in every aspect of the employee
take the first step and effectively guide the employee lifecycleinterview process, learning
and help with integration. programmes, and review. The review is then
encourage their team However, the most against individual constructive actionable goals,
members to have an significant mentoring happens keeping in mind continuous improvement,
open dialogue. on every project, where the which speaks of the firms culture of learning.
model is of 360- degree The power of the model is that it describes
mentoring instead of a one- expected behaviours all the way to the
way or two-way approach. leadership level, thereby demystifying the path
The way it works is; teams consisting of people to the top.
at all levels of the organisation involved in All in all, feedback and open expression
different degrees, and preferably with a wide need to be a way of life versus a programme.
cross section of the organisation. The teams Employees need to be made aware that their
meet in group settings as much as possible for feedback is welcome. Firms need to look
free exchange of ideas. Leaders learn from fresh beyond formal feedback sessions. Team leaders
perspectives that new associates and cross- need to take the first step and encourage their
functional team members bring, and the leaders team members to have an open dialogue and
mentor by contributing benchmarks and domain share their ideas and aspirations as well. They
ABOUT THE AUTHOR expertise. The Socratic method of asking need to connect with their teams not only when
Abhijit questions dominates. Asking relevant questions issues come up, but on a regular basis. Soliciting
Nimgaonkar is to understand the pulse and expressing a point feedback as a whole is important as it builds
India CEC Head and
Office Managing of view to them becomes an effective way of a trust and rapport, too. When everyone on the
Principal, ZS strong two-way communication between the team works to the best of their ability, the team
Associates.
leaders and the rest of the team. is at its productive best.

64 INDIAN MANAGEMENT FEBRUARY 2017

66 INDIAN MANAGEMENT FEBRUARY 2017
Nurturing the primary qualities that define ones personality is the first step
towards becoming an extraordinary person.
VIRENDER KAPOOR
Get hold
of yourself
We are what we repeatedly do. Excellence then is not an
act, but a habit.
-Aristotle
While working towards success, people err
when they look for quick fix solutions. Many
believe in the dont work hard but work smart
ideology.You may work efficiently and optimise
your efforts, but you cannot take shortcuts and
become successful.
Human excellence is a complex entity and I
would like to explain it through my concept, the
pyramid of human excellence. It has three clearly
demarcated sections:
a) The top of the pyramid represents the
capability to organise oneself, learn, and
apply skills to achieve goals and become more
efficient.
b) The middle segment represents knowledge
and education, which one needs to acquire or
learn in order to be successful. These are the
abilities which one learns and acquires through
rigorous education and other knowledge tools.
PERSONALITY
DEVELOPMENT
c) The bottom of the pyramid represents those
basic qualities which form the foundation
of success. These have to be imbibed and
cultivated over a period of time.
While most training programmes focus on
the top two levels, some just address the top
of the pyramid and covers techniquestime
management, teamwork, communication skills,
conflict management, and handling stressthat
are essential to become more productive. These
are popularly known as soft skills. The next level
is addressed through education; the process is
rigorous and the focus is on building domain
knowledge.
While the top two levels of the pyramid are
important, it is the bottom of the pyramid
which is essential. It signifies qualities that form
the basic foundation and need to be gradually
imbibed.
While heading a premier bschool, I got an
opportunity to be a part of the corporate world
and deal with aspiring managers. There, I realised
INDIAN MANAGEMENT FEBRUARY 2017 67
 Understand and Practice

Organising
and Managing Techniques

Learn and Acquire Applying and

Learning Skills

Abilities

Education / Knowledge
Imbibe and Cultivate
Qualities

Critical Qualities of Winners

The bottom of the that the focus has shifted from
pyramid, the basic human the bottom of the pyramid
to the soft skills on the top.
character, has been totally Not only has the bottom
ignored in the value chain. eroded, but the middle of
the pyramidthe rock solid
foundation of knowledge
gained through educationhas also taken a
beating. Looking at the quality of manpower
being churned out by undergraduate colleges,
one gets alarmed. Barring the top institutes, the
graduate exit level domain knowledge is far
below the desirable level. Companies struggle
for months together to train and retrain
them and the cost of this repair is colossal.
Unfortunately, India pays for it. The bottom
of the pyramid, the basic human character,
has been totally ignored in the value chain.
To sum up, the pyramid has been inverted,
ABOUT THE AUTHOR upside down. This is the single most important
Virender Kapoor reason for leadership failure and poor industry
is an educationist, performance across the world.
and author of 12
Essential Abilities Hence, it is time to lay more emphasis on
of Extraordinary building the essential qualities that would help
People.
create a strong base. These are:
1. Will Power/mental toughness/resilience
2. Integrity/dependability
3. Empathy and human touch
4. Delayed gratification
5. Pride and self-esteem
6. Initiative and value addition
7. Making friends/being humble
8. Positive attitude
9. Self-discipline
10. Adaptability and flexibility
11. Believing in yourself
12. Moral courage
I analysed eleven successful peoplean Army
General, a national leader, a top cricketer, an
industrialist, a specially abled person, a top
actor, an inventor, a global CEO, and a scientist.
Instead of displaying an exact figurewhich may
become too judgmentalI have assigned grades
of A, B, or C. Not surprisingly, most of them
scored A and the rest scored B, none received C.
The analysis brings out two important
inferences. First, these qualities are all important
and essential for success in all fields. Second, all
great people need not have a top-end score in all
the qualities required for success.

68 INDIAN MANAGEMENT FEBRUARY 2017


The skills that are These qualities are
acquired at educational embedded in humans and
are often called nature or
institutes may enable an character, meaning these
individual to find a job. are the basic characteristics
But the actual journey of individuals. Our sun signs
begins thereafter. are indicative of some of our
very basic characteristics. One
would appreciate that people
born under a particular sun sign do share a
common thread vis-a-vis their characteristics.
This would appear to be truer if you look at it
from a device, I call macro scope rather than
with a microscope.
It is better to look at these from this
perspective because the things we are looking
at are intangibles. It is difficult to assign, for
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PERSONALITY
DEVELOPMENT
instance, a number or a value to a persons
degree of integrity. It is also equally difficult to
quantify somebodys will power, or adaptability.
It would be futile to gauge these as laws of
physics or chemistry. For example, every
action has an equal and opposite reaction as
per Newtons laws of motion. But in case of
human reaction, every action may or may not
have a reaction, leave aside equal. Traits such as
pride, caring nature, mental toughness, and self
belief are closely associated with our sun
signs. In fact, none of us can accurately
define ourselves. People take a life time to
understand what they are and what they want
from themselves.
Progress is difficult if an individual is not
ready to accept his or her weaknesses. For
instance, one needs to accept that one does not
have many friends but look at it as a gap in life
rather than viewing it as a weakness. The next
step is to fill the gap. If one changes 20-30%
in each of these twelve essentials, there will
be a transformation.
The skills that are acquired at educational
institutespertaining to the top two layers of
pyramidmay enable an individual to find a
job. But the actual journey begins thereafter.
There is a quantum shift in the job profile in
most cases, after a while. The role becomes
wider, more serious in nature; the stakes are
higher and responsibility increases manifold.
At the same time, expectations from peers,
bosses, and subordinates soar pretty high.
There is a shift from managerial expertise to
high-order leadership. That is the time when
the gems at the bottom of the pyramid play a
critical role. In fact, those who have not cared
to develop these qualities find themselves
losing ground among their peers. It is therefore
essential to focus on these aspects as early
as possible.
Keep on sowing your seed, for you never
know which will growperhaps it all will.
- Albert Einstein
INDIAN MANAGEMENT FEBRUARY 2017 69
Investing in employee health programmes is an economic imperative for businesses.
AMARESH OJHA, GYMPIK
Fit companies
T
oday corporate wellness
programmes have become an
integral part of businesses
more and more companies
are taking employee
wellness seriously. But the
truth is that while there
are thousands of wellness solutions, many
companies do not have either a proper strategy
or a constructive plan to implement it. They
are truly trying to figure out the right solution
to combat rising health issues and healthcare
costs. It is here that wellness startups such as
Gympik are trying to make a difference. They
are designing constructive and strategic plans to
help organisations make employee fitness and
health a priority.
The need
According to studies, employees under high
stress cost 40% more than the average employee,
while almost 33% feel that work stress is
affecting their productivity.1 Job stress affects
creativity and the problem-solving abilities of
employees, costing businesses millions of dollars.
Stress may also contribute to unethical behaviour
such as lying to customers or taking shortcuts.
CORPORATE
WELLNESS
Moreover, excessive pressure leads to higher
instances of disengagement and absenteeism. To
overcome these problems and help employees
manage stress, organisations are now thinking
beyond the obvious to develop the right solution
that targets the root causes of stresslack of
employee engagement, mounting work pressure,
and team friction along with the predominant
underlying issue which is physical inactivity.
Organisations with effective wellness
programmes have 34% higher revenue per
employee and have seen 28% reduction in
number of sick leaves. Moreover, it has been
noticed that with most effective wellness
programmes, organisations have experienced
26% reduction in health costs. To build a
healthier and happier workforce, Gympik
has initiated programmes that ensure higher
productivity, lower absenteeism, higher
engagement, and lower job dissatisfaction.
A variety of fitness services are designed and
incorporated into one, to suit employees
diverse fitness interests and needs. In addition
to that, the change of activity in every session
helps break the monotony of following
the same exercise everyday and makes it
more engaging.
INDIAN MANAGEMENT FEBRUARY 2017 71
 CORPORATE
WELLNESS
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Path towards mental and spiritual wellness
This year had a huge impact on the way the
fitness market works and there have been lot of
improvements with companies heavily investing
in initiatives related to improving the employees
physical and mental health and working towards
nurturing the spiritual, emotional, and social
facets of well-being. The year 2017 will be
revolutionary as far as the fitness industry is
concerned. However, with the improvement
in technology, fitness cannot stay away for long
without technology being seamlessly integrated
with it. To make fitness even more effective and
measurable, Gympik has come up with the idea
to incorporate wearable devices and apps that
can track the training programme, its duration,
impact, and much more. This encourages people
to push themselves more towards fitness and
achieve the best out of the training.
Social networking plays the key role
Social networks help spread awareness about
the benefits of healthy behaviour. It has been
found that when people connect their wellness
programmes to social networking platforms, the
outcome becomes more interesting as it involves
ABOUT THE AUTHOR the participation of peers, team members,
Amaresh Ojha is friends, and family. This also encourages people
the Founder and to continue their fitness programme since
CEO, Gympik.
it is more engaging, fun, empowering, and
72 INDIAN MANAGEMENT FEBRUARY 2017
motivating. Long-term engagement is key to
prolonged behavioural change and optimal health
benefits. Furthermore, employees tend to stick to
programmes when companies employ motivating
factors, perks, competitions, and other fun ideas
related to fitness. It has been found that working
out in groups helps in peer-to-peer bonding,
building healthy competition, and leveraging peer
accountability and support.
Rewards and badges work as motivating
factors
Corporate wellness programmes should be
designed in a way that encourages people
to prioritise health.To make this possible,
companies have to take initiatives and consider
aligning programmes that are reward-based. For
example, an employee referral programme where
employees are asked to refer other employees and
the person referring the maximum employees
gets awarded, or hosting wellness competitions.
Making people aware of their fitness progress
compared to others works as a motivating factor; it
also works as a benchmark and encourages people
to push their limits. People are also inspired by
the special rewards, titles, or badges that signify
achievements and gain a sense of achievement.
A successful corporate wellness programme
is designed by integrating employee relations,
leadership, support, qualitative framework,
strategic plan, and employee and employers
active participation.
With more employers inducting corporate
wellness programmes, it is important to
employ the right set of methods and strategies
to effectively employ them. A successful plan
can ensure long-term employee engagement,
sustainable behaviour change, higher
participation rates, and significant health
results for employees. A thoughtfully planned
programme has a higher rate of success in
building a healthier and creative workforce.
1 http://blog.accessperks.com/employee-engagement-loyalty-
statistics-the-ultimate-collection
INDIAN MANAGEMENT FEBRUARY 2017 73
74 INDIAN MANAGEMENT FEBRUARY 2017
Optimal employee productivity is never happenstance; it results from a focused
strategic approach.
GAURAV DUREJA, AMBRANE INDIA
Maximising
potential
T
he success and
competitiveness of an
organisation depends
not only on the overall
productivity of the workforce
but also on the productivity
of each employee. A well-
motivated employee can create a positive
workplace environment and even motivate
others. On the other hand, an unmotivated
person can create a demoralising atmosphere
which could result in others too losing faith in
the company.
This makes it crucial for employers to
constantly find new and efficient ways to keep
their employees at their finest. This would also
ensure that their performance is at peak levels all
year around.
Ingenious observation and prospective planning
by entrepreneurs are essential to bring the
LEADERSHIP
best out of the workforce. The process starts
with managers recruiting qualified people as
employees who will be an asset in the future.
As quoted by Mary Kay Ash, Personnel are
definitely a companys greatest asset. It doesnt
make any difference whether the companys
product is cars or cosmetics. A company is only
as good as the people it keeps.
Entrepreneurs can ace employee productivity
by undertaking the following steps that could
result in an immense change in the level of
employee productivity:
Identify skills set, limitations, and objectives
of employees
Employees are recruited on the basis of their
skills and relevant knowledge of the job they
are applying for. However, these two factors
alone are not enough to understand them.
Managers must conduct a background check
INDIAN MANAGEMENT FEBRUARY 2017 75
Transparency in and do a SWOT analysis of Training and skill development
communication is the candidates to understand In the current dynamic and competitive
them. Also, techniques such environment, training has become a must. It
vital to avoid any type
as job rotation should be used develops a mindset among employees that the
of misunderstanding to identify their strengths management does care about enhancing their
between co-workers, and weaknesses. skills set. Further, the availability of resources
seniors, and managers. and mentorship boosts employee morale.
Allocating goals as per
analysis Transparent communication
The next step is setting achievable goals and Transparency in communication is vital to avoid
targets for employees. It could be frustrating any type of misunderstanding between co-
for a person if the manager sets the bar too high workers, seniors, and managers. While being
and chances are that he or she will do something assigned a certain task, an employee must be
unethical to achieve the target. To avoid briefed thoroughly so that he or she has a clear
employee morale degradation and loss of faith picture of the target to be achieved.
in seniors, it is vital for any manager to set goals
that are clearly defined and realistic. Appreciation and incentives are the
best motivators
Appreciation is one of the most important
aspect when it comes to improving employee
productivity. If a manager is successful in
recognising the efficiency of an employee, he
can find the ideal way to motivate and bring
out the best in him or her. Employees cherish
even the smallest appreciation of targets and
achievements, and those who are rewarded for
going the extra mile to achieve set goals turn
out to be more productive and fulfilling in the
long run.

Workplace which one will not leave

The key to employee productivity is an
environment which is warm, kind, and
welcoming. Professional culture must be
established within the organisation, among both
the management and employees. Every need
of the employee must be heard, addressed, and
appreciated whenever possible. It is one of the
external factors that helps achieve targets easily.
There are cases in which the employees could
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face stress and other health issues due

to workplace envrironment. The aim should
be to create a family atmosphere in the
organisation.

76 INDIAN MANAGEMENT FEBRUARY 2017


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Discrimination must be eliminated
Any kind of bias can result in huge negative
consequences for the organisation. Apart from
being unethical, it could result in an incompetent
person holding a prominent position. Nepotism
can lead to more skillful employees being left
out. Almost every professional organisation
around the world today avoids discrimination of
all kinds and also talks about it being an equal
opportunity employer.
ABOUT THE AUTHOR
Gaurav Dureja Employees are not just employees
is CEO, Ambrane As a human, every employee has a set of
India.
emotions and feelings which should not be hurt.
LEADERSHIP
Their personal problem should be addressed
sensitively. If an employee is in a crisis, treating
him or her with kindness would have a positive
impact. Employees in such situations develop
loyalty towards the organisation and will always
try to give their best.
Right equipment and technology
Managers should ensure that they provide
their personnel with advanced technology and
devices. This is one of the requisites for meeting
deadlines. It also reduces wastage of time and
ensures higher returns.
Promotion and demotion
Promotions should be done in an unbiased,
objective manner. Personal grudges and other
negative experiences should be ignored while
deciding promotions. Rather, an employees skill,
performance, and professional behaviour are the
parameters that should be given importance.
Feedback
Managers should encourage employees
to give feedback in order to have a better
understanding of workplace dynamics. It will
help them gain perspective of how employees
view the company they represent.
As a final note, productivity of the workforce
can be improved by making employees feel
responsible and getting them to work happily
rather than dispiritedly. Teamwork is the ability
to work together towards a common vision.
Alone we can do so little, together we can do
so much. If your actions inspire others to dream
more, learn more, do more, and become more,
you are a productive leader.
As rightly said by Paul J. Meyer, Productivity
is never an accident. It is always the result of a
commitment to excellence, intelligent planning
and focused effort.
Remember that an increase in productivity
will yield a corresponding increase in output
and profits.
INDIAN MANAGEMENT FEBRUARY 2017 77
78 INDIAN MANAGEMENT FEBRUARY 2017
The advent of online pharmacies is changing the nature of consumption in India.
PRADEEP DADHA, NETMEDS.COM
A healthy
option
F
ifty-five year-old Lata was
diagnosed with rheumatoid
arthritis, one of the common
auto immune dieases. Owing
to chronic swelling and stiffness
in her joints, her physician
instructed her to stay at home
and take complete rest. The quandary was
apparent: how could she buy medication
regularly if she was supposed to be in bed?
Her daughter, Tara, who stayed in another
city decided to order medicines for her ailing
mother from an online pharmacy. All Lata had
to do was provide a valid prescription and the
medicines were delivered at her doorstep.
Technology has grown in leaps and bounds and
the healthcare sector has benefitted the most.
Today, with digital technology permeating
every aspect of our lives, consumers can avail
themselves of better facilities in the comfort
of their homes. For India to be a veritable
digitally advanced nation, e-health will provide
the much-required foundation for excellent
quality of and better access to medical
services. This will also eventually lead to a
transparent and efficient healthcare system.
E-TAIL
Whether it is scheduling lab tests online or
installing a biometric system for tracking
patient information, the Digital India vision
for healthcare is empowering citizens to make
smart and meaningful use of technology.
Growth of e-pharmacy startups in India
According to industry experts, the e-pharmacy
sector has great business potential and is
expected to grow from an $18 billion market
to $55 billion by the year 20201. Several
startups specialising in the pharmaceutical
sector have witnessed keen interest from early-
stage investors to capitalise on Indias growing
healthcare e-market. The annual production of
pharmaceutical products in India is valued at
over R2 lakh crore, which makes the country one
of the largest manufacturers of pharmaceutical
products in the world. Online pharmacies
have contributed significantly to transforming
the global pharmaceutical distribution chain.
With the introduction of technology in the
sector, a more systematic platform is in place
wherein it is possible to trace all medicines to
the manufacturers, access logs, track any illegal
drug consignment, and crackdown on counterfeit
INDIAN MANAGEMENT FEBRUARY 2017 79
Patients unable to make medicines. Moreover, online daily or weekly trips to the pharmacy, especially
daily or weekly trips to pharmacies help consumers the elderly, benefit largely from such platforms.
save a lot of time and In order to serve consumers better, several
the pharmacy, especially discourage self-medication. No e-pharmacies track the date of purchase of
the elderly, benefit largely medicines can be sold online medicines and send a reminder to the customer
from such platforms. without valid prescriptions. of the next date to order, helping them maintain
Unlike offline pharmacies, a the regimen.
patient cannot buy his/her choice of medicine
online, as suggested by a friend or a relative Challenges faced by e-pharmacies
to treat his/her illness. The sale of restricted Though e-pharmacies look like a promising
medicines such as Schedule X medicines cannot trend today, the business is challenged by several
be done online unless a valid prescription is regulatory issues. The pharmaceutical business
provided and examined by a pharmacist. comes under the purview of the Drug and
Cosmetics Act, 1940; Drugs and Cosmetic Rules,
Shift from offline to online pharmacies? 1945; Pharmacy Act, 1948; and Indian Medical
The introduction of e-pharmacies has effected Act, 1956. What the sector continues to lack is a
a shift in the buying pattern of consumers. well-defined dedicated law to govern it. All the
Convenient and safe options, attractive discounts, laws related to e-commerce are defined under
doorstep delivery, and hassle-free services have the Information Technology Act, 2000. India
attracted consumers. Patients unable to make lacks concrete laws defined for different verticals
in e-commerce, which means that e-pharmacies
are also under the purview of this common Act.
The authorities who look into the operations of
e-pharmacies are incapable of comprehending
the provisions stated under the IT Act and there
are high possibilities that different inspectors and
controllers interpret the law differently.
The regulation is a Central as well as a
State licence subject under a rigid system
of inspectors and controllers. So, it is not
uncommon to see different interpretations
and views take shape due to the lack of
understanding. Further, archaic laws and
impractical regulations, make it difficult for
e-pharmacies to operate.
The Food and Drug Administration (FDA) of
India often adopts a biased approach towards
e-pharmacies despite them adhering to all
necessary rules and regulations. The All India
Organisation of Chemists and Druggists
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(AIOCD) and other organisations have raised

concerns about the safety aspect of online
pharmacies. While online pharmacies have
helped generate data for the government

80 INDIAN MANAGEMENT FEBRUARY 2017

 E-TAIL

Shutterstock.com
A customer no longer to monitor public health deals unlike at offline stores that sell medicines
needs to worry about the and revolutionised the way on maximum retail price.With the convenience
consumers access healthcare, to shop anytime, anywhere, get free delivery, and
high cost of medicines the lack of proper regulatory other assisted services, an increasing number of
as e-pharmacies provide and implementation-boosting consumers is inclined to shop for medicines online.
attractive deals and mechanisms is proving to be Online pharmacies not only have the potential
discounts on medicines. a bane. to save people from several health implications
In the US, online pharmacies but also bring into effect a more transparent
are governed by the same system. Neither can medicines be hoarded
laws that are in place for offline ones. Both are illegally nor can poor-quality medicines be
required to have licenced pharmacists and a maintained in stores. With tracking facilities
valid prescription. made feasible by e-players, a consumer can
file a complaint or report health issues after
Are more customers switching to online consumption of the medicine.
purchases? Online pharmacists are not just a more
While the future seems bright for new entrants in convenient and cost-effective alternative to their
the e-pharmacy space in India, there is an urgent offline counterparts, but are a more trustworthy
requirement for well-defined laws for the smooth and safer platform to rely on for all medicinal
functioning of their business. Unlike offline stores, needs. Indias healthcare landscape has great
where at times people are forced to wait in long potential to improve substantially with the
queues to buy medicines and haggle for change, birth of more online players that will empower
online stores eliminate all such inconveniences. consumers to access high-quality and affordable
ABOUT THE AUTHOR A customer no longer needs to worry about the healthcare services.
Pradeep Dadha is high cost of medicines as e-pharmacies provide
CEO and Founder, attractive deals and discounts. So, customers have 1. http://www.livemint.com/Companies/
Netmeds.com. EGTOILRRNF0T3J4OfUg9SN/Will-online-pharmacies-work-
the option to avail themselves of the best possible in-India-and-are-they-even-lega.html

INDIAN MANAGEMENT FEBRUARY 2017 81

82 INDIAN MANAGEMENT FEBRUARY 2017
Firing employees can be more expensive than fixing a problem.

VISHWANATH P, FUTURE GROUP TALENT

RETENTION

Busting
ghosts
O
rganisations lose more
when office ghosts
are busted. While this
statement seems counter-
intuitive, I believe that
organisations would do
more good by making sure
ghosts are not created rather than busting them
each time.
Well, we are not talking about real spooky
ghosts or haunted buildings; we are talking of
office problems and employee issuesghosts
that exist in every office. Every office has them
some ghosts are evident to managers, while most
are hidden. As in the case of any illness, only
the symptoms keep surfacing. Managers need to
identify the cause and find a solution rather than
just bust ghosts, which may lead to creating more
of them in the future.

What is the real cost of busting office ghosts?

Busting ghosts or firing employees, or making
their exit easy is perhaps a quick and easy solution.

INDIAN MANAGEMENT FEBRUARY 2017 83

By replacing the This action does get rid of
employee, the manager ghosts, but what is the cost?
Are they permanently gone?
has only driven the Will they never return?
spirit away, only to have Multiple studies have shown
another one haunt in due that attracting a new customer
course of time. costs five times more than
retaining an existing one.
The same logic holds good
for employees as well. Often, managers do not
foresee the real cost of replacing the employee,
but these could include:
Advertising cost: even on social media,
considerable time is invested for identifying
the right candidates
Screening and processing costs: from initial
selection to cost of multiple interviews
Onboarding costs
Cost of learning curve for the new employee:
In majority of cases, this period varies
from three months to even a year in large
organisations
Cost of ripple effect: the cost of low morale of
the team when a person leaves the company
Cost of cultural fit: Cultural fit is now
recognised as one of the biggest determinants
of good employee performance; a misfit could
create trouble across the entire team.
The estimate of the true cost of replacing
an employee could be five to nine times the
monthly pay cheque. And this does not include
the risk a company has to undergo owing to the
dip in customer service levels on account of
new hires.
Does this cost result in positive ROIs?
All organisations talk about positive return on
investment when businesses are evaluated. By
the same logic, should not the People Office
ABOUT THE AUTHOR
and all people managers in the organisation
Vishwanath P is understand the ROI of replacing employees?
the Chief - Strategy
and Project The answer is a definite yes. Given that the
Management Office, cost of replacement is so high, would busting
Future Group.
ghosts have a positive ROI? The bigger risk in
84 INDIAN MANAGEMENT FEBRUARY 2017
such cases is that there is a high chance the ghost
will return to haunt the workplace. By replacing
an employee, the manager has only driven the
spirit away, only to have another ghost haunt in
due course of time.
It is therefore more critical to understand why
there are office ghosts in the first place, and try
to solve the problem.
The solution?
In organisations that encounter the problem
of office ghosts, there is a pot of evil energy
creating them. Hence companies should work
on removing these pots and create sustainable
workplaces for employees. Some of the most
common areas that organisations could evaluate
for correction could be:
Making line managers more
appreciative of people: One of the
most critical roles of HR is to make every
manager in the organisation appreciate his or
her team, and to cultivate the habit of managing
people well. Many a time, a well-planned HR
initiative is crushed to the ground on account
of poor handling by the managers. The weak
link in any HR programme is the way line
managers take it forward to front-line executives.
Unless this link is strengthened, firing a ghost will
only result in another being created with time.
Creating an open and inclusive
culture: In recent times, many leaders have
spoken about the need for building a more
inclusive organisational culture. But if asked to
define an open and inclusive culture, majority
of the front-line managers would fail to give
a convincing answer. The risk is that high
performers are the worst offenders in this area.
Many of the high- performers fail to understand
that an organisation is diverse and to be
sustainable, it needs to accommodate different
kinds of people in teams. A stated policy on
inclusive culture implemented by a manager
who wants only his or her clones in the team is
sure to keep creating office ghosts.
 TALENT
RETENTION

Shutterstock.com
Every employee has a Ensuring employee Creating social connect: Every employee
social world and the alignment: Alignment is not has a social world and the greater the positive
just about setting KRAs and impact organisations have on this world, the
greater the positive measuring them on time. It lesser ghosts they would create. HR managers
impact organisations goes beyond this and extends should not become event managers who end
have on this world, from how employees are up managing birthdays to corporate picnics to
the lesser ghosts they selected in the first place off sites, for the sake of maintaining the social
to how their careers are connect. True social connect is established when
would create.
managed in the organisation. employees are understood as humans first. Set-
Alignment will remain an ups that do not understand how humans think
elusive territory unless every and act will create ghosts in quick succession.
employee is convinced about his or her role in HR managers should involve front-line
the organisations growth, and this is followed managers in getting rid of office ghosts.
up with appropriate role measures, authorities, Together, they need to clean up the negative
and rewards. energies that create these ghosts.

INDIAN MANAGEMENT FEBRUARY 2017 85

86 INDIAN MANAGEMENT FEBRUARY 2017
Will demonetisation be a push or pause for the real estate growth journey?
ARUNA DHADE
Firm ground
T
he governments recent
demonetisation move is one
of the boldest decisions the
country has witnessed since
Independence. The ban on
R500 and R1000 currency
notes led to chaos at the
ground level, but most citizens were optimistic
and supported the crackdown on black money.
This step, along with reforms in various sectors is
sure to project India as a promising economy on
the world map. Although the primary motive was
to curb black money, it will have a far-reaching
impact on the economy as a whole.
The impact of demonetisation on various
sectors will be felt in varying degrees, depending
on the amount of illegal transactions involved in
each. The most affected will be the real estate
sector as it has always had significant appetite
for black money consumptiontypically, one-
third of the transactions involve money from
unaccounted sources.
SECTOR
FOCUS
Pre-demonetisation: reforms
As per recent reports, the parallel black money
economy holds R30 lakh crore of the countrys
economy, which amounts to nearly 20% of
the total GDP.1 The real estate sector accounts
for almost 11% of the GDP, but unfortunately
anywhere between 30% -40% of the transactions
involve black money.2 If these unaccounted cash
transactions are included, the sectors overall
GDP contribution would be much higher. The
potential of the sector has remained more or
less untapped for a considerable period of time,
as only half of the deals are registered through
formal channels.
Before announcing the demonetisation drive,
the government had initiated a few reforms
in the real estate sectorin the last couple of
yearsto protect the interests and rights of the
common man. It had also launched a self-income
declaration scheme, offering the black money
hoarders a chance to come clean. However, the
governments scheme went mostly unheeded
INDIAN MANAGEMENT FEBRUARY 2017 87
Sale of luxury apartments by real estate developers.
and villas are the most The reasons behind the cold
response were: first, the real
affected in the retail estate sector was already facing
housing sector. a liquidity crisis owing to poor
demand and non-conclusive
deals. This situation compelled them to tightly
hold the cash in their wallets. Second, the fear
of losing further liquidity by paying tax on
undisclosed income (in addition to the regular
tax). Third, they adopted a wait and watch
approach in the volatile atmosphere.
Inherent legacy of unaccounted money
Basically, there are two types of home segment
buyers. First is the primary buyer who buys
property and finances it through financial
institutions or banks, where minimal cash
transfers take place. Second is the second sale
buyer of housing propertythis is where most
deals are in cash. Hence, second sale market
is going to be affected more, as maximum
transactions use illegal money sources of
unauthorised accounts. Sale of luxury apartments
and villas are the most affected in the retail
housing sector.
Retail dealers will be badly hit. This segment
comprises organised and unorganised; high-rises
and slums. All of them either generate or handle
black money. Transactions in the slum segment
are dominated by cash and remain outside
the revenue system. Those in the white-collar
buildings have a white-to-black ratio of 70:30,
60:40, or even 50:50 depending on the area in
which the property is situated. On the contrary,
those which use minimum cash components
commercial office property, rental property,
leasing, and legal financing will not get
much affected.
This sector inherently carries the legacy of
black moneyright from the purchasing of land
from farmers to converting it to commercial
property to getting approvals from various
government departments, large amounts of
88 INDIAN MANAGEMENT FEBRUARY 2017
cash is required. Cash components changes
several hands before reaching the final buyer.
Demonetisation will make it extremely difficult
for any buyer to pay in cash. The seller will
also not accept such money. As most of the cash
transactions will be curbed further, builders
will be compelled to reduce cash transactions
and join the mainstream economy. In the given
circumstances, the only option left with property
dealers is to buy property through legal financing
with due respect to taxation norms. With this
move the middle class dream house could be
able to see the day light. This will automatically
bring down property prices.
Post demonetisation: economic outcomes
The demonetisation impact on economy can be
measured in the phases of short-term (days to
three months), mid-term (three to 12 months)
and long term.
Short-term effect-buyers market: Lack
of excitement in sector will push down rate
of inflation. Consequently, public sector banks
may reduce interest rates on home loan and
financing. Experts fear that for the next few
months there will be little or no transactions
in the land, commercial spaces, and residential
units in the resale market (secondary). Buyers
with fair income will adopt cautious approach
hoping that prices will decrease further.
The fear psychosis of investment recovery
among sellers would restrict them dealing in
properties at this moment. Non-availability
of prime properties would further spread
disappointment in the sector.
Medium-term effect-innovative ideas:
In the medium term, gradual improvement
in liquidity and reduced interest rates could
make homes affordable to the middle-income
class. Due to financial stress, some properties
might be available on sale with discount in the
secondary market. Some market gimmicks may
be applied to attract customers. Construction
cost may be pushed further down to recover

INDIA GDP FROM CONSTRUCTION
2051.93
1916.56 1914.92 1927
1797.56
Jul 2013 Jan 2014 Jul 2014
Source: www.tradingeconomics.com, Central Statistical Organisation, India
The real estate sector
is a high employment
generator.
ABOUT THE AUTHOR
Dr Aruna Dhade, is
Assistant Professor
of Finance. She
has been teaching
graduate and
undergraduate
courses in
finance at Indian
universities and
Qatar University
(AACSB) for the last
19 years.
2377.8
2285.27 2290.92
2213.23
2079.94
2004.73
1975.08
Jan 2015 Jul 2015 Jan 2016
the investment on expensive
deals. To some extent innovative
ideas of cheaper and efficient
construction techniques may
come up during this period to
further adjust reduced prices. Implementation
of real estate reforms will inject confidence
among the buyers to surge revival mode. The
negative impact will be reflected on the sales of
premium higher-end properties.
Long-term effect-standardisation:
Over a period of time, fair deals will restore
transparency. Through formal intervention and
involvement of the banking sector, banks will
play an active role in price negotiations. They
may further enforce regulations to declare
official rates of land and property, which has
been the norm in the Western real estate
market for quite some time. Prices could be
controlled by setting upper and lower limits on
a price band range.
In the long term, institutions will come
forward to align and comply with global
standards. The sector, with corporate governance
practices, will push ease of doing business and
foreign investors will be more open to explore
opportunities in India. The entry of more foreign
SECTOR
FOCUS
entities (developers and funds) will ensure
more liquidity and transparency. According to
2400
the data released by Department of Industrial
Policy and Promotion (DIPP), the construction
2200
development sector of India received Foreign
Direct Investment (FDI) equity inflows of US$
24.19 billion between April 2000-March 2016
2000 much to the relief of cash-strapped and debt-
IND Billion
ridden real estate sector.
1800
Broader economic spectrum
Demonetisation process will leave its footprint
1600 strongly on the real estate sector, specifically, and
Jul 2016 also on the various spectrums of the economy.
For example, under-construction projects will
receive a jolt and will be forced to review the
overall situation. Without sufficient demand for
housing for a prolonged period, manufacturing
units of construction materials would face the
heat. Transportation, banking, and financing
sector will also suffer due to this slow down.
The real estate sector is a high employment
generator. Any slow down would result in lesser
employment opportunities in the under skilled,
semi-skilled, and unskilled categories. According
to a 2015 report by ASSOCHAM over 75% of
the 3,540 real-estate projects, with investments
worth over R14 lakh crore, across the country
are yet to begin. Once these projects start
functioning, huge employment opportunities will
be a possibility.
Demonetisation has boosted confidence
among citizens. The governments next move
should be to ensure implementation of reforms
such as single-window clearance, digitisation,
corporatisation, professionalism, prompt
services, and more transparency in the
housing sector.
1 http://indianexpress.com/article/business/economy/ambit-
capital-black-economy-shrinking-pegged-at-20-per-cent-of-
gdp-2835783/
2 http://reports.ambitcapital.com/reports/Ambit_Economy_
Update_Indiasbattlewithblackmoney_26May2016.pdf
3 Emerging Trends in Real Estate Asia Pacific 2016 report by
PricewaterhouseCoopers (PwC) India.
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