DOES URBANISATION LEAD TO HUMAN DECAY?

DOES URBANISATION LEAD TO HUMAN DECAY?

SCENE 1:

Year 1938. My father arrives from Pudukkottai via Madras to Bombay in search of a job and livelihood. He was 24 years old, had a wife to support and Bombay was the Mecca of commercial world even then. But at that time Bombay was also a very small city. The length and breadth of the city was covered in 15 to 25 square miles. As told by my father, it was relatively a clean and affordable place for everyone from all strata of society. For every new comer like my father, there was a local guardian and a good samaritan who made life easy to adjust in an alien atmosphere for the young man and his wife.

SCENE 2:

Years between 1938 and 1970. It looks like a long period. But it is a typical active life span for my parents in their best years in Bombay. One scene still stands out in front of my eyes very clearly. We had a small family function, like a thread ceremony of my elder brother. We were living in a typical Bombay chawl sharing a single floor with eight other families. There were only two common toilets for all the nine families to share in each floor. Typically each family had an average of 3 to 4 children apart from the parents. The typical space per tenement was hardly 240 Sq. ft. Despite such limitations, when we had this function, it was festive time for all the remaining families. Their doors were open to all visitors who had come to attend the function; every one shared all the roles of the host family to such an extent that we never felt the limitation of the place where we lived. The function was a great success.

SCENE 3: The year 1996. I had left Bombay by 1974 and for various reasons, which I shall narrate later, I never went back to Bombay except for occassional business visit. During one such visit, recently, I decided to visit my old neighbours at my birth and child hood place in Bombay. It was evening hours. The lights were dim. However there was not a single bulb burning on the common passageway. The individual houses/tenements showed reasonable signs of relative affluence compared to my younger days. But the neighbours generally kept to themselves. When I queried about the contrast between the inside of their homes and the lack of maintenance of common facilities, my old neighbour lamented that they do not cooperate with each other any more like the good old days. Each family looks after itself. In fact, out of the old nine families, only five remain with old roots. Others are totally new to that neighbourhood in the last decade. They don't feel the sense of community togetherness any more. The younger generation of the remaining families have gone away in search of better prospects, leaving only the oldies behind to fend for themselves. There was clear sign of absolute decay both in the facade as well as the inner portions of the building. I also felt, may be this decay also has spread to the human beings living there.

My father had informed me that the concept of slum living was not heard of in Bombay when he first came. Most people lived in proper housing facilities appropriate to his financial status and capability. The basic infrastructure was reasonably adequate to take care of average man's needs.

The concept of criminal mafia managing the city portels emerged only after 1960's when Bombay started growing as a mega city. Along with the extensions of the infrastructure, the pressure on the city due to extensive influx of population also increased with the result that today despite having the best facilities, barring a few localities, any other part of the city makes you feel that you are living in a slum. The dehumanising aspect of the life in the excessively urbanised Bombay has to be experienced to understand what I have proposed as a Hypothesis in the beginning: "Urbanisation leads to Human Decay".

I already mentioned that I left Bombay for good in 1974 when I left for Bangalore to pursue my studies in Management. Having experienced a quality of life quite different from Bombay, I realised that while Bombay would give me lot of money, it cannot offer the quality of life I want. Hence I could never go back to Bombay. I chose Hyderabad in 1977 when I came here on transfer and instantly liked the city for all the reasons which contrasted with Bombay. While Bombay was big, Hyderabad was small. The life in Bombay was hectic where as it was laid back here. The weather in Bombay was sultry while it was dry in Hyderabad. While, as a management trainee, I could hardly afford Bombay, I could support not only myself but my wife too very comfortably. There was warmth in the people whom I met then. And on lot of occassions I experienced the kind of personal touch in relationships which my father talked about Bombay in his early days.

But today Hyderabad is growing to be a megacity. But in the process of growth I also realised that it has taken the worst aspects of urbanisation. Some of the symptoms which made me think of an alternative to Bombay in 1974 are to be seen in Hyderabad today. For example while the city spread geographically in Bombay, the original infrastructure did not grow at the same pace leading to substandard quality of life. I find a similar situation in Hyderabad. Today new housing projects are promoted in areas where there is neither roads, water supply, drainage, nor electricity.

The personal contact between people is also getting reduced to business level. In fact today if you ask a Bombayite whom does he meet more often in his daily life even socially, chances are that 90% would say people with whom they have work or business related interaction. I am already getting a similar feeling about Hyderabad. However a lot of you may disagree; it is only a matter of degree. But the positive trend towards this is very much there.

In Bombay the only basis of human relationship is money. In fact whatever may be your background and intellectual prowess or capabilities, if you don't have money and do not display it you are no better than the paraiah dog moving around the city.

While Hyderabad has not yet come to this state, to me the positive trend towards this is already visible. The growth of Country Clubs and Treasure Islands and the quality of members who patronise them are typical symptoms of this trend.

While pondering on these lines I came across an interesting TV programme a few years back based on the famous book by John Kenneth Galbraith titled CIVILISATION. In one of the episodes Mr. Galbraith presents the history of modern megacities. In a lucidly presented narration he states that what made mega cities attractive to talented people was money. And talented people having made money in the mega city started moving away from these very cities to live in the suburbs leaving the poor, who have no other alternative to languish in the squalid wastes of the mega city. And the worst part of it all was that the very rich, who lived in the suburbs, did not bother to contribute to the upkeep of these very mega cities which sustained them, leading to their eventual decay.

Looking at the fate of modern megacities like New York, Chicago, Tokyo, London, Paris and closer home at Calcutta, New Delhi and Bombay and reading about general trends in urbanisation in places like Bangalore, Hyderabad and the recent civic tragedy at a small town like Surat, I am left wondering: Is urbanisation really necessary for the growth of human civilisation?

With the latest developments in technology of transportation and communication, can we not reverse the decaying process of urban growth by spreading back civilisation to the original land mass from where they all migrated to the urban jungles over centuries?

I am throwing these issues at all of you readers for a healthy debate.

PS: I wrote this article for a local Newspaper in Hyderabad, Deccan Chronicle, some time in 1996, when I was having a weekly column to write what ever I can think of on subject connected with Management. When I look back in 2023 today, I wonder was I making a prediction of future to come as we see in many big cities it has become difficult to move around and the general pollution levels have become life threatening. I am once again asking my readers for a healthy debate.

R. Srinivasan

(Photo courtesy Google Stock Photos)

CUSTOMER FOCUS

 

BUILDING CUSTOMER LOYALTY.

(The article below I published in my fortnightly column in Hyderabad based Deccan Chronicle in 1996. I am reproducing below a part of it to relate it to what is happening today in the e commerce environment)

Recently (in 1996) a friend of mine who travels regularly abroad gave me instances of how businesses abroad work overtime to build customer loyalty. Research studies have shown that it requires ten times more effort to get a new customer than to retain an existing customer. In one interesting paper I came across, the author puts forth the idea that customers can be your apostles or terrorists. A satisfied customer will be your apostle who will inform three others favourably. But a dissatisfied customer will be your terrorist who will dissuade ten prospects from coming near you.

So how do we convert every customer into an apostle. Some of the instances I shall narrate below may throw some light on this subject. It is natural for many a businessman to turn around and say that such ideas will not work here in India. So I shall also give you instances of similar experiences in India to drive home the point I am making.

Sony Experience.

This is a true story narrated by my friend. His nephew, living in New York, USA gifted a Sony Diskman to his brother in India. It worked well alright but only when it is placed horizontally. As per the Sony catalogue it is supposed to work quite well when kept vertically too. But true to his Indian experience he did not worry too much about this. However during one of his calls to his brother in USA, he casually mentioned this problem while telling him not to bother about it very much. However my friend's nephew in USA insisted that he return the unit back to him when their parents were visiting USA shortly.

By the time the parents did visit USA six months later the nephew in USA had shifted from New York to Pennsylvania which is like shifting from Bombay to Hyderabad. However he immediately took the defective Diskman to the nearest Sony dealer in Pennsylvania and mentioned the problem. The salesman at the counter promptly took back the unit, located an alternate unit for replacement. Then he went to the cash counter and took out a ten dollar bill. He came back to the customer and apologetically informed him that due to continuous technical improvement, the original model has been discontinued but the latest model equivalent to the old model is available for replacement. Further since the new model is cheaper than the six month old model by ten dollar here is a refund of ten dollars.

Kindly note that the salesman did not ask for the original bill of purchase. He did not question the customer to establish whether the customer did anything to damage the unit. He did not even test it to verify the customer complaint. He was simply empowered to accept the customer's word and give a free replacement with appropriate refund.

The Kodak Experience.

This is the story of another cousin of my friend living near Niagara falls. Quite a few tourist visit Niagara Falls area from all over the world including USA. Whenever tourists travel the ubiquitous camera follows. However it is always a problem for him to decide how many rolls of films to carry. Either he may take a few rolls more and suffer the cost of underutilized rolls or a few rolls less and suffer the disappointment of missing shooting opportunity. So Kodak shops in many places across USA have a policy where they offer you to buy as many rolls you want to with the proviso that you can return the underutilized rolls before the expiry period after your vacation. This way they ensure that their films are preferred over their competitor while ensuring that the tourist doesn't suffer the inconvenience of having inadequate films or excess films.

However recently when my own nephew returned from USA for a short Holiday he showed me a new camera along with large number of films in his bag. When enquired about the price of the camera he said that this camera was given on hire for the duration of his visit from the very shop he bought his films.

The Cardigan Story.

When this story was narrated to me by my friend I was really floored. One of his cousins had bought an expensive cardigan for his wife on her birthday from a neighborhood supermarket in Chicago where they were staying. The washing instructions for the cardigan very clearly said that it should be washed only in cold water and under no circumstance should hot or warm water be used. However, as things happen, one day the wife duly washed, by mistake, the cardigan in hot water along with other clothes. As warned by the manufacturer it came out of the washing in complete tatters.

Like any Indian housewife living abroad she asked her husband to take it to the supermarket for replacement. The husband promptly refused saying that it was her fault. Not giving up the wife decided next day to go herself and get a replacement. Next evening when her husband returned from work she showed him a brand new cardigan in replacement for the old. While narrating the incident she passingly mentioned how nice the sales girl was towards her.

The husband immediately pointed out that there was no girl working in the shop where he had bought the original cardigan. So he probed his wife deeper about the shop and discovered that she had got a free replacement from a totally different shop. Being a true honest Indian he decided to go back to this shop next day to return the "unfair" replacement. As he entered the second store, he met the sales girl described by his wife soon and hesitatingly explained to her how his wife had made a mistake and he had not bought the material originally from this store etc. and said he would like to return the cardigan. The salesgirl promptly stopped him in his track by saying that she all along knew that the cardigan was not sold in her store and still she gave a free replacement. Our friend promptly queried her why she did so. Her instant reply was "Now I have a delighted customer who will come back to me again".

Looks more like a fairy tale than a true customer account indeed!! Having been used to rude shopkeepers and unfriendly manufacturers who loudly proclaim in their bill that goods once sold will not be taken back, it is very difficult to visualise how such customer friendly attitudes can be inculcated in our business environment. But then I have personal experience in the recent past when in India I came across similar "Horror" stories. I use the word "Horror" in a metaphoric sense because they apparently look horrific in the Indian context.

The Hotel Experience.

In my regular travel to Bombay on work I used to stay in a particular hotel in south Bombay which is part of the well known Taj Group. Two incidents struck me as unique in this place.

In one instance I was checking out in the morning after breakfast at 8.30 AM. I went to the cash counter on my way down. I had not intimated in advance my plans to check out. Normally I am used to waiting anywhere between 15 to 30 minutes for a ckeck out process to be completed. The first surprise was when I found there was no queue of people waiting to check out before me. Second when I indicated my desire to settle the bill using the Citicard credit card, the cashier took my card and passed it through a magnetic card reader, entered a few strokes of Keys on his computer and presto within thirty seconds my bill along with the citicard credit slip was handed over to me for my signature. I was out of the hotel in 60 seconds on my way to the airport. And to my surprise I found that all the room service bills, telephone call charges were correctly accounted.

In the second instance, in the same hotel, on another occassion another customer was checking out before me and he had a small problem with his bill. He pointed out to the cashier that there were two room service bills charged to his account where as he had ordered only once. One amount was for Rs. 350/- and another was for Rs. 460/-. The cashier asked him whether he could remember which one was his. The customer could not help. The cashier promptly agreed to delete the higher of the two amount and asked him to settle the bill.

I had always emphasised that there is a need to design organisations focused on the customer. The above examples are typical of the customer focused organisation. In all these examples some simple principles come out loud and clear. Every business man can benefit from these principles and build longterm customer loyalty.

What are these principles?

First and foremost is the principle "Trust Your Customer". Here keep in mind that majority of customers are basically honest and would come back to you for a redress only when they have a genuine problem. By treating them with respect and meeting their problem promptly you convert their sense of frustration into a sense of permanent gratitude and thus long term loyalty.

The next principle is "Resolve the Problem Immediately". In all the cases I have narrated the salesman or cashier resolved the problem immediately with total satisfaction to the customer. They did not ask the customer to come back later or made them wait while they sought the permission of their bosses.

The next principle is "Empower Your Employees" to please the customer. As can be seen from all the above cases with out such an empowerment it would have been impossible for the employees to do what they did.

The next principle is a corollory to the above principle which says "Trust Your Employees". I think this is very obvious.

The next principle is "Use Information Technology creatively". Except for the last example I did not highlight the role played by IT in facilitating the above principles. But in all these cases a statistical record of transactions are maintained using IT with respect to customers and the employees which identifies possible misuse of the system. Thus management now control after the event rather than during the event recognising that the cost of sending back a dissatisfied customer is much more than the loss arising out of occasional misuse.

During my consulting assignments with my clients I tell them these stories as prelude to make them recognise the daunting task ahead to change them from their old way of working to the requirement of the new ways of a liberalised and globalised world. It is interesting to note that these principles are applicable to all types of businesses be they small or big, dealing with Industrial or consumer product, services or ideas.

What is important to recognise is that if you want to build customer loyalty it is not enough that you have a good product and a good advertisement campaign but every part of your operations must be fine tuned to delight the customer.

When I wrote this in 1996 the stories narrated and the insights shared were very different from the prevailing norms across industries and businesses. Over the years technology continued to evolve and the Diskman and colour film rolls have become museum pieces or someones personal collections to cherish past memories. Even Kodak has disappered from the market which they dominated. And the very concept of buying from a store has shifted to online for most of the items. So the question we must ask is are these concept of getting customer loyalty still relevant when there is no face to face interaction and in many cases the relationship is purely transactional and through a bot. The question I pose to my readers is how do we make sure the customer focus is not lost sight off in a world of e commerce where you dont get the kind of feedback which comes from personal interaction. If they are still valid how do we ensure customer loyalty is not forgotten as an archaic concept of the brick and mortar world. I ask my readers to share their own experiences today which addresses this issue.

R. Srinivasan

A Factory Without General Stores

A Factory Without General Stores

I was introduced to the MD of a multinational Glass Fibre unit in Hyderabad through a common friend in 1999. He had just taken over the job as MD after a year and half working on the project of buying up this unit from an Indian Corporate group on behalf of the MNC and now after the takeover he was given the responsibility of managing the day to day operations and scale up the unit to a higher level.

Soon after he took over he found there were a lot of operational issues which used to bog him down and he had to spend a lot of time resolving these issues which need not have come up to him at all. When I met him I was sharing with him my recent experiences with other businesses in India helping them adopt the concept of Business process re-engineering and how I found some dramatic changes and improvements when the management took it up seriously. He narrated an event that happened the previous day in his unit. He suddenly found on his table along with many other documents a note asking for approval for Rs 28/- towards an emergency medical expenses incurred in the factory along with the medical shop bill. He was furious but could not do anything except call the concerned people and give them a piece of his mind. He was told that since this purchase amount was not in the approved category as per company policy this has to be cleared by MD.

Hence when he met me he was immediately reminded of this and many more instances of a highly broken procurement process when he had to intervene everyday knocking out valuable time. He asked me to work on an assignment to Re-engineer their procurement process first.

When we started the assignment he felt that to make a quick impact on the power of this approach we must look at one of the areas where there would be immediate and dramatic change which will compel every one to adopt BPR in all aspects of their work. As usual we formed a cross functional team and were looking at the various areas where procurement was playing an important role. Suddenly the team members started talking about the complex ways in which they had to deal with the running of the factory canteen and the system of coupons and the amount of work involved in administering the same. And how many times they could get their canteen food even without the coupon when they happened to forget it in their homes. The team felt that if they could re-engineer the canteen process which affects every employee then BPR would become easily adoptable in other areas. 

After analyzing all the aspects involved in the management of the canteen, the team found two important home truths based on the actual working. While there was a lot of administrative work associated with printing, distributing and accounting of coupons, in practice since the work load is huge the accounting of the coupons for making bill payment to the canteen contractor was in fact done in a cursory way only and most of the time whatever the bill the contractor submitted got passed based on an average cost per person estimate per meal. Suddenly the team realised that if the final act of procurement, the bill payment, actually gets done without 100% accounting for the coupons, and the actual payment was getting made based on an estimate of the average cost per person which is not documented, why not do away with the coupons altogether and pay the contractor only based on an agreed rate based on the number of people opting to eat at the factory canteen. Needless to say the first objections came from the finance and administration people. The admin said what if someone eats more dosas than the other or eats more food than others. There will be IR issues. The finance department said what if the contractor charges for people who don't eat. By this time the MD, who was still rankled by the experience of the Rs 28/- medical bill, gave his ruling asking everyone to implement the redesigned process immediately. 

Very soon the management found that 5 people from admin and 2 from accounts apart from a large number of almirahs needed to store the coupons and room space were released from their work associated with managing the canteen coupons system and they could be assigned other work. Most important aspect was that both the workers and the canteen contractors were happy since they had a most cordial relationship since the management said workers can eat however much they want and the contractor now got paid based on the number of  workers registered for canteen food. Very soon the management and the contractor found that workers on their own ate only that much food they needed to sustain and not excessively and the canteen contractor knowing well that his income is fixed based on numbers, found ways to reduce waste in the canteen. Win win for all.

This experiment encouraged everyone to take a relook at the complete procurement process. Like in any such continuous process unit the centerpiece of their operations apart from the glass making furnace which has to run for 24x7, 365 days continuously for 8 to 10 years before it is scrapped and rebuilt, the general store played an important role. This is the back bone for ensuring that the Glass furnace doesn't stop for any reason. Hence a lot of inventory was carried here just in case they will be needed suddenly. When we asked everyone connected with running of the plant how often many of the store items were really used the answer was from daily to once in a year to “not recall when we last used” this kind of story for most of the items.

The team also found that they had more than 3000 items of value about Rs 80-90 Lakhs in the general stores and nearly 600 plus suppliers were in their approved list most of whom were multiple vendors for the same items. Despite all this when an indent was raised it took at least a month and in many cases more than a month to procure any of the standard items in the store. We also found out that many items that the general store carried as inventory also were standard inventory in the supplier's premises, most of whom were dealers for these items of factory supplies. Since there were many suppliers for any item no supplier was sure of the quantum of business they could get from the company and hence they waited for firm orders before taking up actions for supply.

When the team was in the process of setting goals for the procurement process, they said why not we crash the inventory levels by 90%, number of vendors by 90% and the time taken to supply by 90%, the MD suggested why not we think out of the box and do away with the general stores and let the suppliers keep the stock and give us just in time. This was too much for any one to accept but then MD insisted that he wanted the re-engineered process to do away with the general stores and he can use that space for the factory production expansion he has planned.

When the redesign got completed the team found that it is not impossible to do away with General Stores if the number of vendors got reduced from 600 to 30 with literally a single vendor for each category of item like electrical, hardware etc. The vendors now had annual rate contracts with a provision of automatic review of the rate as the market moved with a guarantee of a substantial volume of business provided they dont fail even once in their commitments. The bill payment process also got simplified with the indentors directly dealing with the approved vendors and using IT passing the bills for payments by finance. As the technology improved even direct funds transfer to the vendors bank accounts were arranged.

When I met the team after a year I was surprised to find that the general store had in fact been replaced by a new manufacturing area and now they got calls from the vendor reminding them about when the time for replacement has come for some of the critical store items. The story did not end here. When the annual accounts were presented to the global head they were surprised to find zero inventory in the general store and they sent a special audit team to find what was going on. When they found out the re-engineered process made it possible to run the factory without general stores, they commended the Indian management and recommended that 77 plants located in different parts of their operations world wide should adopt this best practice.

PS: Image Copyright of Glasfeser_Roving.jpg taken from Google images

Principles, Practice and Politics Of Management

 Principles, Practice and Politics Of Management

One of the first lessons in management schools is titled Principles and Practice of Management and they form the core basis of understanding how the modern organizations are supposed to be managed based on these core principles and practices. However as one gets into the real work world every student of management and even those who don't have formal management education background soon come to realize that there is one more "P" that governs the management philosophy of our organizations which is not formally stated anywhere. I decided to call it "Politics" of Management.

No management literature ever overtly recognises the existence of this P even though there are several euphemisms used to describe this. One of the papers I came across used a concept called Informal Networks to describe this phenomena. Here the author described how the real power structure in an organisation is dictated by not the formal hierarchy but some informal relations individuals enjoy with the power that be. I came across this first time when I started my career over 37 years ago when I found that the Personal Assistant to the Managing Director who also used to work as an errand boy for the MD's wife once in a way was wielding unusual power over everyone in the organizations including other directors!!.

The politics of management is inevitable in an organisation since by the very nature of its structure the organizations are based on the importance of exercising power through some form of hierarchical  relations between people and when there is power to be wielded there is bound to be some form of alignment around the power structure leading to jockeying for power and control. In a well managed  organisation this politics is effectively directed and controlled for the benefit of the organisation by good leadership. But the situation gets complicated when the politics overtakes the role of management at the cost of the organisation. 

As a management consultant I had several opportunities to have a ring side view of how this Politics of Management works across the organizations. Before I proceed further I must clarify what I mean by Politics of Management. As the word Politics imply it is all about finding ways to capture power and wield it. One of the ways of capturing power is directly bid for it through the hierarchical process with higher roles and responsibilities. This is available only for a few who are good at rising up the narrowing organizational ladder to the top. But for a large number of people this path is closed for a variety of reasons but still they have personal ambition or opportunity arising out of a role to wield power and exercise control. 

My early years were spent working as management consultant for small and family owned businesses. In every one of these businesses I noticed the business owner had one or two individuals working for them for several years and whom they trusted. While the organisation brought in outsiders to man the various roles and responsibilities created due to the growth of the business, these individuals had the "ear" of the owner and by virtue of that proximity wielded enormous power. In some business families usually this person would also belong to the community to which the owner's family belongs. Well there was nothing wrong with this model so long as the owner got good advice and guidance and also "intelligence". However I found in most of the cases where I had been approached for addressing some serious management problems faced by these small businesses, I found that many of their problems were linked to these informal power centers misleading the owner against other "outsiders” who are usually professionals doing their jobs. Thus it became my responsibility to highlight this distortion to the owner without antagonizing these informal power centers to address these problems effectively.

Subsequently when I started working with large corporates I found that the politics of management are in full flow across many levels. There, in several management board meetings where I was invited to attend, I saw how the different functional heads take stand on issues based on the power equations they wielded with the chief executive. In one case I came across a curious situation where one of the Vice President's father was a director on the board of the firm and he was ambitious to take over as the chief executive. During the period when we were working as consultants this individual systematically sabotaged the initiatives of the CEO to set right some major problems under the direct charge of this VP and one day we found the  CEO removed from his job and he was elevated to the CEO position.

In another case we were working for a multi unit business group and our role was to help one of the business units going through serious problems by adopting the concept of Business process re-engineering. The current CEO had recently taken over as the head of this unit and he came from outside this group with very good credentials. However he had to report to the top management group of the multi business group through a Unit Head who was a power center himself. The unit head was an old hand with the group with the ear of the Chairman. Apart from this there were other few employees who were reporting to the new CEO who also had a direct link to the chairman on account of their long association with the group. In the course of our first six months of work the new CEO started turning around the unit by doggedly implementing the BPR recommendations which exposed some of these old timer's wrong doings and ineptness in the past. All hell broke lose and one fine morning the new CEO got a marching order from the chairman after a year on the job. I was witness to the working of Politics of Management here at very close quarters.

However if the CEO is a very strong and focused person he can easily deal with the negative aspects of the politics. In a MNC company we had recommended a change in the way the sales process is handled which effectively reduced the current power structure of the Regional Managers. During the implementation one of the regional managers told his boys that they have to follow his instructions only and not bother about the new way of work approved by the MD and the top management. When the MD got to know of this he immediately called up the Regional Manager and told him that he either learn to adapt to the new model or he can look for another job. 

With the advent of Information Technology and the democratization of information I had hoped that the politics of management should come down. However I have had occasions to interact with some of the recent rising stars of the IT industry and many others who had adopted IT extensively in automating their business processes. To my astonishment I found that the politics of Management instead of coming down is very much there and in many cases it is on an increase as seen by the recent series crashes of global economic power houses. Many subsequent studies have shown that these setbacks are mostly due to management decisions dictated by political considerations rather than good principles and practice of management.

As I said in the beginning this topic is never publicly discussed but it is an undercurrent prevailing in all organizations. In India we have a saying when there are two people discussing a topic they could be friends. But when there are three people discussing the same then they form political parties. It is in the nature of human beings to be political in their social equations. In any group behavior this is very evident when people align themselves to one or the other group. Moreover human beings in my opinion are not capable of equal relationships. In all relationships you either control the relationship or you get controlled. This is all the more so in organizations. Even Late Jack Welch the famous former CEO of GE  used this dictum "Control your Destiny or someone else will" as a management philosophy very successfully. The issue is how does good management practice ensure that this Politics is directed effectively for the good of the organisation.

PS:Title image is copyright of Organisation-power-politics-management.jpg and used from Google images

Competition and Pricing Responses

 Competition and Pricing Responses

Practically every business faces this problem particularly when you don't have any monopoly situation prevailing for most of the businesses. As a marketing consultant in the early days and later as a management consultant advising on the business process improvements for medium and large businesses, this was a major issue which required to be addressed for most of my clients.

I remember once I was asked to address a team of field sales people by a large consumer marketing company which was nationally distributing high brand value and relatively high priced products. During the sales conference all the salesmen started complaining that since their products are priced high in relation to their competition, they were finding it difficult to meet their sales targets. The sales manager who had asked me to address them had also briefed me on this problem and took my help in making the sales people understand how to position high brand value with high quality in the minds of the customer and use it as a selling proposition to realize high prices demanded. 

The easiest response when faced with competition is to drop the price. That is a lazy mind response from a marketing manager or the management. And like your product it is the easiest response to copy by any competition. And it ends up in bloodying the battlefield for every one. Similarly giving gifts and incentives as sales promotional tools help in the short term but again the schemes can be easily copied and bettered and the net result is another set of bloodied battlefields.

The basic premise of my advice to management is never to compete on price but find ways to add value to customer experience of owning your product or service which creates value perception beyond costs and let everyone focus on communicating this value proposition to sell your desired price. Every marketing research and our own experience shows that no one remembers the price but everyone remembers a bad experience.

Let me explain with some real cases. All of us are familiar with how large companies try to beat competition with price drop. This was a response one of my clients wanted to use to prevent a competitor from getting a toe hold in their respective customer base. At this time we were doing a Business Process Reengineering exercise for their complete supply chain management from procurement to order fulfillment and as part of the exercise we along with their team met many of their customers to see what they were looking for from the client in terms of value. In practically every case we got two major feedback. One, the client should improve their delivery performance and two, there were some product quality issues which they had raised especially during monsoon season and they would like that to be addressed. When our team specifically raised the issue of how important the price dimension is, they said that they value only the two issues more than price. If the client cannot deliver on time and deal with the quality issues then they will look for another vendor based on price.

Recently I had to help a small business unit referred to me with a marketing problem. They wanted to add more customers and found that wherever they approached a prospective customer there prices were higher than what some competition was quoting. They were not sure why their new prospects would even consider them for a trial when they are priced higher. After looking at all the issues connected with their costing it was coming out clear that all competitors who were quoting lower prices could fulfill those orders with such low prices only if they compromised on the specifications.

I advised the client that while all customers won't be concerned with such specification compromise there will be some potential customers who would be bothered about such matters and suggested that they discuss with the end users of their prospect companies to influence the purchase department on the need to maintain specifications of supplies. When the trial order was placed in all such cases my client unit did not have any problem with the approval with such customers and those who had quoted lower prices and delivered had their supplies rejected on non conforming to specs. Caught with this dilemma the purchase managers had no choice but to focus on my clients for regular supplies and did not make a big fuss on their prices. To bolster their case further I suggested that they show their complete costing to the customer to establish the integrity of their prices.

In a matter of six months they were able to add a dozen new customers to their existing customer base. More than that this also gave them the confidence that while trying to get a new business the focus should be on what is of value to their customer. In some cases along with quality just in time supplies become more important. And if you find ways to reduce cost then this lower cost can be used as an advantage to reduce prices if needed without compromising on quality and service.

Recently we have been experiencing severe competition in all major business sectors. Unless you are still in a business where shortages are endemic or it is controlled by a licensing regime, all this competition has an impact on prices. Such competition also forces companies to find ways to cut costs. I have found that such attempts are fraught with danger since costs cutting measures can also lead to reducing the ability of the organisation to serve the customer better. Thus instead of getting more customers by reducing costs the organisation can lose customers arising out of bad service or other aspect of value to customers. Some time back a computer dealer mentioned this dilemma he faced. In order to match competition at the time of selling all dealers were quoting below cost price to get an order. But they started asking customers to pay for all after sales service at additional costs to make up for their sales loss. Moreover many of them stopped giving on site service insisting that you have to send the computer back to bench for any service problems. One can imagine what happened to the poor customers who while gaining at one end lost heavily at the other end. And as a user of a computer we all know how important a good service support is.

While competing on price cannot be avoided if one can find ways to ensure that such prices do not lower the value delivered to the customer then it will be useful. How does one achieve that? Many management gurus advise us that when you run a business the reason for its existence is the customers. Hence what is good for your customers is good for you. At the same time it is the people in the organisation who do work to deliver that value. And if these people follow the right processes which are designed to deliver that value then competing on price can be made very profitable for all concerned. I have found that creatively adopting concepts like Business Process reengineering, Lean Management and Theory of Constraints we have been able to help many organizations compete effectively while improving business performance. The size of the business is not an issue, it is the commitment to creating customer value and a leadership willing to back this commitment which made these organizations compete effectively.

Finally, can we avoid price competition at all? The answer is no. But as is happening in many technology driven businesses if you can find ways to add new values and features which did not exist before then you can find ways to relaunch or reinvent your product or services at much higher prices than prevailing before. The case of mobile phones is a good example which everyone can understand. But in many industries it is possible to to realize higher prices by adding more values to your offering there by reducing the total costs for the customer. In the case of a packaging manufacturer, we advised them that instead of simply supplying the packaging material where the price competition is severe they should handle the last stage of packing and shipping for the customer and charge based on per unit shipped. Thus instead of getting paid for per unit of material now they got paid for shipping per unit of the customers product. The value price realised was an order of magnitude several times the unit price of the material. But one of the un-intended benefits was they ended up completely eliminating any competition for their packaging material business with these customers. Similarly in the transport business we found that many goods transporting companies moved away from a highly price competitive goods transport business to third party logistics management business focusing on inward and outward supply chain management including cash management services to add value to their clients business at higher unit price realization. 

So my mantra is don't compete on price as a cost but compete on price as a value experienced by customers. 

IMPORTANCE OF FOCUS

 IMPORTANCE OF FOCUS

How often we come across a situation when someone starts a discussion on an issue and soon we find that the subject has digressed to so many unrelated topics. It is so amazing that despite such a development most of us don't recognise this digression and get caught up in the discussions on new topics till someone points out we have moved away from the original subject. Today I want to share with you the Importance of Keeping Focus.

Whether an entrepreneur discussing a business problem or a manager discussing a situation it is imperative to keep Focus. The focus should be on the core subject under discussions and any temptation to go around to other related topics should be managed so as not to lose focus.

Let me explain with a few examples. A small business man met me other day with a request to help him grow his business by addressing his marketing problem. When I met him first I asked him to give an idea of what his business is all about and what his present customer profile looked like and what volumes of business he has from each of them and what spare capacity he has. I also needed some idea about his costing, pricing and competitors' information. In the course of discussing these he started narrating his problems with getting reliable labour to work in his factory and other problems relating to managing his business and after about 20 minutes of listening I had to remind him that we are discussing his marketing problem for which we must first focus on the market related information to take some basic decisions and then we can go inside his factory and address his operations related problems.

In another instance, we were working in a large manufacturing company implementing a Business process reengineering concepts in their supply chain management process. While collecting background information the discussions veered round to the need for accuracy of sales forecasting and soon we had a spectacle of the production executive and the marketing executive picking up a big fight over how each of them in their opinion is foolish and don't know how to do their job. Very soon as consultants we had to bring order and get the team to focus on the subject in hand and help defuse a potentially explosive situation.

Why do we lose focus? It is not that everyone wants to lose focus. But in our desire to communicate the issue, sometimes we feel it is important to share other related information which we believe may have bearing on the issue at hand. There is nothing wrong with this except that these related issues should not end up becoming the main issue. That is the main problem in keeping focus.

Another reason I found we lose focus is when someone in the group feels that the related issues are more important than the main subject under discussions and tries to steer the discussions towards them. Here the personality of the team members come into play. A dominant member of the group has a tendency to hijack the discussions in whatever directions he wants and most of the time after the meeting is over other members would privately express their resentment to this but would not dare to intervene during the meeting to bring the focus back.

Some time I found that the problem definition has not been articulated properly hence there is a scope for digression as the discussion goes on. I will illustrate this with an example. In a very large company we were working on a culture transformation exercise and formed cross functional teams around different problems they were addressing. One of the team was working on the condition of the toilet facilities in the factory at various locations. When we started the exercise we asked the team members to define the problem. While it looks ridiculous now to ask what is the problem in the toilet facilities, at that time we found the five team members from various departments who had stake in the upkeep of the factory toilets spent first full day listing out the problems based on their departmental perspective which essentially said that we are doing our job but other departments are not. As a part of the culture transformation process we allow deliberately in the first sitting to let everyone say what they want to say and simply ask them to document everything that is said without any debate. As the session progressed in the first one hour they listed more than 50 problems and by lunch time they had reached nearly 200 problems when some one in the group started observing that each member is presenting the problem from his perspective whereas the problems listed reflects the issues faced by them created due to the way other departments worked. This realization suddenly made the team members come out of their adversarial positions to an accommodative position when every one said that the real problem lies in the combination of the problems listed so that they can define a single problem which is the problem that they need to address. The team got its Focus right and from then on  the exercise became very meaningful and rewarding for all.

The lack of Focus leads to waste of time and also frustration as the real problem does not get addressed. Quite often it is useful to have an outsider in a discussion unrelated to the problem under discussion so that he can act like an umpire, bringing the focus back and reducing waste of time. But it is not possible to have an outsider all the time. Hence it is important to cultivate a habit to get your focus right whether we are involved in a discussion or engaged in an activity to address a problem.

I have presented here a few perspectives so that this topic can form a basis for a good discussion in this forum. I would like to invite readers to present their own perspectives and views on this subject.

IMPORTANCE OF BRAND IMAGE

 IMPORTANCE OF BRAND IMAGE 

As a marketing consultant I have had several occasions to work with companies with established brands and had a ringside view of how some companies systematically work to destroy such great brands without realising that they are doing so.

I will share here a couple of cases which can be quite illuminating as to how not to work against your own brands. While each of these cases had some unique market situations the basic lessons can be extended across all brands for any type of products or services.

Every marketing man swears by the importance of brands and would give his life metaphorically to protect his brand and its image. But quite often this passion for the brand starts and ends with the marketing executive whose role is to build communications around the brand. When the rest of the organisation doesnt think it is their concern to protect the brand that the problems arise.

My first major experience was when I was involved as a marketing consultant to help launch a new 2 wheeler brand using the established brand identity of the famous brand “Vespa” of Piaggio of Italy which had recently relaunched itself in India after a gap of nearly 20 years in the early 1980’s. Shortly after the first wave of liberalisation in the auto industry was announced in 1980's, several international brands in the 2 wheeler market decided to enter India through their local collaborators. Vespa, which was an established name before their brand name had to be removed from the Bajaj scooter brands due to end of their collaboration agreement with Bajaj Scooter, decided to re-enter the Indian market with 2 collaborations: one with Lohia Motors in the north and another with AP Scooters, a public sector undertaking in the south based in Hyderabad. Both the companies knew from the background of the starved Indian market during the permit license Raj and also from the huge wait list for the Bajaj scooters running for more than 7 to 10 years at that time, they had a killer product in their hands. And both the companies aggressively relaunched their respective scooters using the Vespa Brand name as a prefix and got huge advance bookings which should have kept their factories running for the next 10 years. However today both these companies don't exist in the market for scooters and Vespa had to wait for another 20 years to re-enter the Indian market recently with a relatively soft launch to hopefully re-establish their lost image.

What went wrong. One of the lessons in marketing is that Brands represent the value benefit as perceived by consumers. By using the brand companies can effectively communicate the promise of the values embodied in that brand. But customers also would like to experience that benefit when they actually use the brand and if the experience reinforces that value the brand becomes stronger in the marketplace. In both the case of Lohia and AP Scooters while the Vespa name helped them get customers to wait for delivery, once the product started hitting the market the experience of the customers was far different from the Value promised by the brands. For example in the case of Lohia they had introduced the wide body design very similar to the Bajaj scooter but due to a policy of excise duty prevailing at that time to keep the price of the vehicle down they launched the product with 100CC engine. The first impact was that these 100CC engines could not carry the whole family consisting of man, woman and at least 2 children with enough power and the vehicle started failing on the road. In the case of AP scooter they had launched the narrow body version of the same model with 100cc engine but their problem was that power was not an issue but the size of the scooter was too small for this whole family. Apart from this basic flaw they also faced problems of quality hitting the customers hard and over a short period of time all those who had booked having got these reports and negative publicity associated with these models started cancelling their bookings. By the time these companies could address these problems and come back to the market with improvements they had lost their so called Vespa Brand Equity and other players had taken over the enlarged share of the market created by the relaunch of Vespa at that time.

Another example is from a building materials industry where the company was pioneer in the launch of several brands of building materials in the decorative laminates market and they also had commanded a premium for a long time. Customers were used to long delivery delays from this company due to this premium image and the whole company was managed based on a philosophy that there customers would be willing to wait for their production to deliver. But the situation started changing after 1992 when liberalisation and certain policies of the government favouring small businesses gave them excise duty differential benefit in pricing and soon several small units with simpler technology to make decorative laminates came up with both price advantage and also faster delivery. And many of them were prepared to supply directly to customers even for order sizes of one sheet at a time which was impossible to emulate unless our major players were prepared to reinvent themselves in terms of both manufacturing practices and also manage the supply chain differently to compete with the local small players. This was a tall order for the management of the company who had got used to the comfortable lifestyle of being in the sellers market and suddenly finding themselves competing in the buyers market and unwilling to let go of their old practice. Half hearted attempts were made to change but  I found the lack of committed leadership to bring about change was a major limiting factor and soon the company became a victim of sickness and BIFR case. Even though the brand image of this company was very strong they could not capitalize on it due to their inability to respond to the customer expectations.

I have many more cases on these lines but the principle lesson I wanted to share was that Brand Image is a double edged sword. In the hands of a competent management it becomes a cash cow and in the hands of others it becomes like a knife in the hand of a monkey.