I brought back the absolutely unique goan sausage last week from Goa. This, however, was not the purpose of my visit. I was attending the first imedia summit (http://www.imediaconnection.com/summits/29320.asp) in India. I must confess, I was not familiar with this event platform - but my interest was piqued to discover that it was bringing together 60 marketers with 60 members of digital agencies. For HCL Technologies - operating as we are in 30 countries - economics limits media choices; the high relevance of digital on the media menu card allowed me to take time out to attend.

I definitely do not regret attending. The learning was valuable - though I still need to process it to convert it to value for my business. The following note is my attempt to distil what I heard and saw during the summit into actionable learnings.

1. Digital is brilliant below the line : This is both the mediums greatest strength - as well as it's greatest weakness (as I will demonstrate going ahead). For the moment, lets focus on the strength. There are many brilliant examples of how digital has been tactically used to promote a product or a launch. Watch this video for a fine example - http://www.youtube.com/watch?v=Xa7FvS-uq_8&feature=youtu.be. How Volkswagen launched the Fox in Brazil  using twitter. The trick ? - Handing out tickets for Sao Paulo's biggest rock festival through twitter participation. This can be a brilliant idea for youth platform initiatives (like HCL's www.madltd.com) to create enormous buzz and participation in such platforms.

2. But can brands be built digitally ? : and in this lies the massive weakness. I heard numerous examples of promotions, as well as some examples of brand building (for digital brands - india's www.makemytrip.com as one fine example). I could not find a single example of an off-line brand which has successfully used digital media for brand building. I am still looking for one..... I have some ideas for how one could be built (which may or may not hold - and I will talk about this ahead) but I have no examples to offer.

3. Everyone's an evangelist. Yes, even you ! : My big lesson in creative strategy. Traditional advertising delivers a message through mass media and depends on reach and frequency (the two most used words during the summit - and the most telling testament to the traditionality of mindset ). This means that as long as the brand can ensure you see the message - the job is done. This, incidentally, is where the digital job just begins. If you cannot see yourself in the message - you will not engage. In digital, thats as good as no reach. It doesn't stop there. If when you engage - you do not find something remarkable (pl check Seth Godin's purple cow theory) you will not pass it on. That's digital death. Content is absolutely king in digital - not reach and frequency. If the message is relevant and remarkable - it will generate it's own reach and frequency. If you don't believe me - check this video http://www.youtube.com/watch?v=WIvmE4_KMNw.

4. Sweet and Sad : So lets push this a little bit more. What kind of content has the best chance of being universally relevant (the reach challenge) as well as remarkable (the frequency challenge). That's the crux of the Rational vs Emotional debate. The minute the human being becomes the source of reach and frequency (and not a television channel) unfortunate side effects kick in. People must WANT to consumer the content. People must NEED to share the content etc. Its a no brainer - the girl effect video itself would have shown that the answer MUST lie in the zone of emotion. And this goes back to great advertising - just watch the greatest advertising pitch ever made (http://www.youtube.com/watch?v=suRDUFpsHus).

5. Social Networking is tautology : It should actually be called Content Networking (or Social Tools). A big learning from me was that real engagement and conversations happen on Content Platforms - and not social tools like facebook or twitter. When I thought about this - it suddenly became clear that Facebook itself is actually a content platform for photographs ! And its on photos that the maximum conversations happen. Social Tools are very effective at pointing towards the content. The real engagement happens where the content is housed. When I looked at the HCL context - Vineet Nayar tweets, has a Facebook page as well as a page on our internal social network (called the "Meme"). Yet the maximum conversations his thinking generates happens on his Harvard Business Review blog. The last post (http://blogs.hbr.org/hbr/nayar/2011/09/how-women-can-flourish.html) generated 35 comments in the first few days of going up - and has unbelievable retweet stats. I cannot say I was unaware of this - but it just brought home to me the criticality of ensuring that your "social" strategy is backed by a very powerful content platform strategy (a hub and spoke model as it were).

6. Who ? : Big question. If digital media means content and channel are joined at the hip - what kind of team can handle it ? Between the input at the summit, and a healthy contribution from @_anshul - here's the answer. 1 writer + 1 designer + 1 technologist + 1 imagineer. Of course, in my book the imagineer has to be the marketer. I really think the days of the marketer briefing the agency so that they can come back later are over in the digital world. So I have a team working on a breakthrough mobile app for our upcoming global meet in Orlando. The above constitution holds for that team. Lets see.

7. Marketer vs Agency : Throughout the summit, I could sense a certain frisson between the two communities. The change in ways of working (indicated above) might be a reason - but probably not, given that this milestone is still some way out. It did not take me long to realise the issue was far more real world - money. Marketers spend money on branding. Digital gets positioned below the line to direct response - in effect, getting the left-overs. So we go back to the key question - can brands be built digitally ? From an agency perspective, I believe this is the single issue everyone should be working on. Unless significant thought leadership and evangelisation is brought to this issue - the frisson will remain. I do have 3 things which I think will be critical in defining a brand digitally. I also believe if digital agencies focus on these 3 areas in their interaction with brands - happiness will result.

8. Creating a digital brand 1/3 : Community : So assume we do the You part well. Enough You's become a We. That's a community. The community becomes the core evangelist group. The brand connects emotionally - and spreads. And this is where the off-line / on-line question can also be addressed. For instance - basis this aspect, I believe Harley Davidson (which has already mastered community creation through the HOG) can do phenomenal digital branding. From a marketers perspective - if your business has community building capability, you can do very well through digital branding. From an agency perspective, there are ready made low lying targets for community building in any brand - employees and existing customers. It may make sense to engage with marketers through these as a start point.

9. Creating a digital brand 2/3 : Engagement : There is a common perception that more fans / more likes etc a digital brand make. I saw a very interesting contrast between Docomo and Vodafone (the zoo zoo). The former had many more fans - the latter had much higher conversations and buzz. Followers and Fans do not measure engagement / buzz; disposition or quality of conversation. The Nike plus program is an excellent case in point. Nike Plus, allows runners to keep track of their runs using a small accelerometer in their sneakers.  The runner can plug the device into their computer and track results against their friends via leader boards. As a matter of fact, Nike was the only answer I got when I asked the question on brands being built digitally. It of course did not fly - as the Nike brand was built much before (and through conventional advertising). Engagement is a natural extension to communities - both brands and agencies should be thinking of engagement ideas once communities get identified.

10. Creating a digital brand 3/3 : The business model : And this is where it gets really tricky. For various reasons (transparency for one ?) digital brings the kitchen into the restaurant. Unless the marketer is in a business which is willing to examine the business model from a digital point of view and adapt - relevance and remarkability can get swamped in a backlash of disbelief and betrayal. At the very least (if the brand is listening through social media) there has to be readiness and a process to rapidly adjust the business model basis feedback. Recently, when DBS Bank in Singapore suffered a massive outage in its IT systems it faced a major backlash. Soon after, OCBC Bank in Singapore also suffered an IT outage - but their CEO immediately went public with an apology and an explanation (http://www.ocbc.com/global/others/Gco_Maintenance_Msg.shtm) - with no backlash. Marketers have too long been used to the "hidden kitchen". Digital brand building brings a new problem - which will need a business solution.

Net takeaway. Great brands stand for one unique idea. The digital world is custom made for the creation and sharing of ideas.  Logically, great brands can be built digitally.

What are you waiting for ?

 

Recently the entire India based corporate marketing team retired to Jim Corbett for it's annual "leapfrog" offsite. Our offsite's have always been built on a simple premise - you dont go away to sit in a conference room. Question is - what do you go away to do then ? And though we have done this in a similar fashion time and again - this time it struck me.

Let's take a look at what we did (all thanks to the magnificent mind of Hiranya Bharadwaj ably supported by Geetika Chaudhary, Koushik Bhattacharya and Anand Narayanan.

Late at night we boarded buses. After an uneventful (and fairly comfortable) journey - we woke up to this amazing video by Hiranya. Watch it now

Once we reached and freshened up - it was time for the offsite set-up, as well as formal discussions of the plan for the year. We had an Olympics format for the offsite - just take a look at the scoreboard and you will understand...

In short - there were 6 teams. And we had the Olympics. Teams squared off on Cricket, Football, Swimming, Table Tennis and such like - till one exhausted team won. A treasure hunt ran parallel to all this.

To start with the teams had to find names for themselves. There were colored bands for each team - and that color had to feature in the name. You can results above.

Having got themselves names - the first task was to finish off the work part. Presenting the plan. I was however forbidden from making any presentation. Instead - each team was given the plan presentation and asked to enact a skit from one of the transformational programs for the year. The tricky part was - the order of presentation was random. And once a program was presented - it could not be done again. So each team had to prepare multiple skits not to be caught short. Consequently - everyone managed to absorb all the programs.

The skits were hilarious.

I never had the slightest clue that there was so much scripting, acting and musical talent within the team. All real time. The audience scored each group after their skit on how well they were able to explain the program - and did it quite well. I could have presented the plan till I was blue in the face - without achieving this kind of comprehension.

The partying and games started after this. Teams fought hard and all acquited themselves well. However a few teams stood out - The Red Bullies who finally won. Black Daniels and Blue Label who fought ferociously through the tournament. I was part of Yellow Dal - and we narrowly escaped being bottom most.

As the two days passed - I discovered a few interesting learnings, watching the teams who were doing well. At the very top of course was my learning of what a team can achieve - which I now firmly believe is competency. Teams do not create value - just competency. Individuals create value. All three teams at the top were very competent. One individual pulled the Red Bullies ahead of all others. Right now - I am not thinking so much about individual impact. It's team impact thats on the brain.

So what makes a team create and master a competency. For memorability - let me introduce the 3 C's

1. Contribute : Every single individual in the top teams WANTED to participate in everything that was going on. The girls played cricket and football in the hot sun. The boys actively hared off on the treasure hunt. Those who could not act in the skit became a chorus to create a sound-track. Those who could not play TT trekked to another resort to support their players. Those who could not swim - jumped off the deep end. The examples were numerous. You see - you may not always be good. Thing is - if you dont try your best; people in the team who are good wont either.

2. Collaborate : Once everyone was doing their bit, the group developed mutual respect. Individuals swap notes to discover each other's strengths and weaknesses. The group actively starts a process of collaboration that leverages every individual for their strength. The winning groups actually therefore had a strategy - they knew which contests they would gun for winning, they knew who should participate and what sort of help they needed to provide each other. I remember one match my group played - we bowled out the opposition for a low score. While they were getting bowled out - their key bowler kept exhorting everyone that they could protect any score. They planned for it - got the field right and we lost the match.

3. Compete : This is the part of the word competency that we often forget. If everyone in the team pulls together - the team as a whole needs to be ferociously competitive. Quite simply - the team that wanted to win the most; won. Frequently I have also seen in these group exercises that the team which wins the first exercise - goes on to win the entire tourney. When you compete and win - you become more competitive and win more.

So here's the deal to create a team that leapfrogs. Get together and decide the competency that team needs to build. Ensure everyone has a role in which they can contribute. Ensure all know each other's roles and are kept aware of each other's victories so that they develop mutual respect and collaboration. And finally - decide to be world class and better than anyone else in that competency. Then...........

Leapfrog.

 

Recently a very capable young man in the team posed a very thought provoking question to me. Aniruddho Mukherjee - a key member of team Europe asked me about the latest trends in FMCG marketing and their implications on what we do. This gave me a pause. I had left the FMCG world over 6 years ago - and realised I knew precious little of recent developments.

My first reaction was - nothing new could have really happened, right ? To validate this I spoke to a bunch of people I have a lot of respect for as professionals. Rahul Sinha - now President, Sales and Marketing for Pidilite - and a former colleague in ITC. Hemant Malik - the COO of ITC's Trade Marketing business. Sabyasachi (Tutu) Mishra from Lowe - just returned to India after heading their Vietnam business.  LK Gupta - the CMO of LG India. All in all a bunch of fantastic guys. And I was wrong. A lot has happened.

What was also interesting is, I heard a lot of stuff that was common - and also diverse. Well in keeping with our two-speed times. As a consequence, I am describing the overall trends that I heard without ascribing them individually to a source. I will then attempt to pull this back to the IT services industry.

Trend 1 : The Death of the Brand Manager : Value Zone moves from Factory to Channel  :

Traditionally, FMCG's were primarily manufacturing organisations. Consequently marketing was intensely product aligned. The marketer identified a target segment, uniquely positioned the product into a brand - and media invested his way to salience. Trade would typically be viewed in an almost homogeneous fashion - even if there was a multiplicity of channels, ONE channel would dominate.  Traditionally this worked, because consumer segmentation led to the consumer herself being homogeneous.  That's changed. Unilever (the master of the segment called housewife)  has begun targeting different segments like youth (and even children). This is leading to the emergence of trade marketing - with marketing structures evolving around channel definitions as opposed to product definitions.

Trend 2 : Services Play : FMCG becomes people centric :

As a continuation of the first trend, the sales organisation (in short, human beings and not products) have become critical. Especially in emerging markets - sales attrition has become an issue of significance. Given the plethora of product extensions and promotions that channel focused marketing leads to - it is of great importance to have a sales force that can "turn on a dime" and possess the tribal knowledge to succeed in flux. Unfortunately - the recognition that sales is a valuable resource has created all kinds of competition within the FMCG world leading to significant attrition. Especially amongst the companies with the strongest brands (who traditionally believed that they could under-invest in sales due to the strength of their brands). There is a strong case of applying "Employees First, Customer's Second"  tenets to sales - perhaps translating to significant investments in sales training and empowerment. As an aside, this is driving a lot of technology adoption in FMCG sales (mobility for instance).

Trend 3 : Real Time vs Timeless. The story of Fabric Glue.

Interesting. Each trend seems to flow from the previous one. As channel sales gets empowered, marketing is rapidly having to replace strategy with high quality tactics. In earlier days, sales data would be analysed monthly and quarterly - and would ultimately end up impacting marketing primarily in the annual planning process. Real time information is changing all of this. On the positive side is allows for rapid pick up of new demand sources. The flip side is it requires a completely different form of competitive response. Let me take a very interesting incident that Rahul Sinha pointed out. His organisation (which is into adhesives), launched a new product called fabric glue (you could now glue instead of stitch). The sales team suddenly found extremely high growth for the product coming from a remote corner of Jharkand. Investigations revealed that there was a rural handicrafts sector in the area in which women decorated garments with stones. They discovered significant productivity increase when they substituted stitching with fabric glue - leading to the jump in sales. With this insight into a new source of demand - the marketing team put together a campaign targeting handicrafts sectors across India. They rest - as they say - will soon be history.

Trend 4 : NOT Prosumer. But close enough.

The digital revolution is creating prosumers - user generated content being the best example. However, in FMCG, consumers cannot produce the goods. But they can certainly participate. There are multiple instances today of marketing directly connecting the consumer to the product specialist. Don't confuse this with marketing initiatives to get consumers to create catchy slogans - think more from a help-desk perspective. I must thank Rahul for some wonderful examples - none better than Fevicol Marine. Adhesive effectiveness lies in speed of drying - unfortunately carpenters in Kerala were quite challenged in using Fevicol on plywood due to the humid climate. One such carpenter was put through to the product specialist - who had to re-think formulation. The highly successful Fevicol Marine was born. By making consumers a part of the product development process, smart marketers are winning big.

Trend 5 : Product to Emotion. No more P's. It's all E's. Empower. Engage. Enchant.

Trade or Consumer. Everyone's human. Hemant talked about a very interesting program where ITC organised a painting contest for the children of retail trade members. LK spoke about brands engaging in people's aspirations (he took the example of  Dove's campaigh for real beauty). Disney's "Let the memories begin" campaign was a fantastic exercise in engagement.Though advertising is moving into engagement - even engagement is not enough. Tutu made this important point - when engaging with youth, tonality becomes very critical (imagine talking to a teenager !). It is easy to get rejected. To get the next gen audience to listen - you have to connect. And this is where relatively unknown brands have the ability to upstage highly established brands. The Australian tourism boards "Best Job in the World" campaign is a case in point - huge amount of youth excitement. The interesting thing with today's youth is they are humanising and democratising the world.  They behave with great audacity in order to express individuality.  The old world bores them. If you want to engage them - please enchant them.

What should I take away now from an IT Services marketing perspective ?

1. Get back to marketing basics : I find it very interesting that the destination for FMCG marketing is already where IT Services marketing is coming from. Very sales aligned - with segment heterogeneity being taken to the extreme of individual accounts. The difference is - the FMCG boys are doing this on the back of pre-built brands. This our category lacks. Consequently, our individualised efforts are leading to a rapidly commoditising image. The most obvious solution would be to focus the business model itself on a particular segment. But. Given the width and diversity of offerings we have developed - this is not an option. Companies in our industry are waking up to this - and launching new "brand campaigns". Unfortunately - this pulling straight out of account focus to industry focus is not helping. It is resulting in meaningless strap lines slapped on turgid websites. It is precisely this one for all approach that FMCG is moving away from - and for a very simple reason. In this open information age - brands have lost control over touchpoints. Not only do we need to go back to the basics of brand identity and positioning - we need the business model to back this so that what's outside is the same as what's inside. Once this "golden equilibrium" is reached - it will create great content. And the most basic marketing truth (for all time) has been - if you have great content, they will come.

2. The Channel deserves a marketing plan : in our business there is a great advantage. There is only one channel. Our sales engine. It is entirely possible that the marketing team which drops all other audiences - and focuses all energy and investment in empowering and enabling the sales organisation - may build the strongest brand.

3. Converting real time intelligence to thought leadership : Understanding that the moment of sale to the channel is the real moment of truth - FMCG has begun doing a commendable job in leveraging real time intelligence to create moments of magic. In the context of our industry - the moment of magic is usually the consequence of thought leadership. There is enough going on all the time in the world of business  to convert random data and incidents into a point of view that would be relevant and eye-opening for clients. Chief Economists in banks do this well (when taking time off from doing their real job of GDP prediction and stuff like that).

4. Customer Mentoring : there is great value in involving key customers in our development journey. Happily, HCL is already doing this extremely well through the Customer Advisory Council.

5. Focus on "how" for enchantment : This is really the big learning. Even FMCG is humanising through various forces. It is certainly a zone where "Employees First, Customers Second" may have a lot to teach the FMCG space - as well as a reminder to us to recognise the sustainable value this philosophy brings. Interestingly enough - across all industries - the employee IS the brand.

When it all boils down - marketing is the art of modifying behaviour to favour your brand. That has not changed. It's just got tougher and more splintered.

 

I have found it difficult to give my wife a present in the recent past. That's 2 birthdays and 1 anniversary without a gift, and (while I can feel your envy) the pressure keeps mounting. Till I killed multiple gift birds with one stone - an iPad. Now everyone's happy with the new toy. It was'nt a dress, jewellery, cruise et al. Just an iPad.

Couple weeks ago, in the very excellent becker-posner blog (http://www.becker-posner-blog.com/2011/01/bad-and-good-inequality-becker.html) Becker argued that inequality could be good and bad - given that it would be hard to motivate a large group of individuals to exert productive effort if all were equal. Good inequality therefore creates the aspiration necessary to convert a large population into a productive community. I found this quite a compelling argument.

The flip side of course is when developmental effort does not trickle down - and economies keep growing, all kinds of social stress gets created. An interesting Wall Street post (http://blogs.wsj.com/indiarealtime/2011/02/08/india-journal-can-egypt-happen-... postulated that Egypt cannot repeat in India and China because these two countries have pulled large numbers out of poverty into the middle class. While this may be true - I do not think you need an Egypt kind of conflagration to create societal destruction. This can happen far more insidiously. A story in the Delhi papers today focus on how the incidence of rape in the city is increasing due to migrant workers from semi-urban and rural areas expressing frustration due to unfulfilled aspiration. It is quite likely even in societies with haves and have-nots separated by the somewhat-haves (essentially the middle class), aspiration frustration can be dangerous.

The i-Pad might actually change this. Tomi  Ahonen offered this fantastic insight on mobility being the fastest industry in the history of mankind to reach $ 1 trillion. It took 31 years compared to automobiles which took over 100 years. With smart-phones and tablets now, the upper end of the mobility market is exploding. At the end of the day - there is only that one wallet a consumer has (remember I'm focused on the somewhat-haves, we can leave the have's to their private jets and yachts). If mobility seizes a trillion from that wallet and continues to grow explosively, something else will not grow. In developing markets, the closest people the have-nots can develop aspirations from are the somewhat-haves. So what might be happening here ?

Aspirational purchase for somewhats increasing moves towards technology. To enjoy technology - or even to flaunt technology - you require an education. Traditionally the nots (especially in rural areas) would lack the motivation to handle the challenge of putting children through school. If societal aspiration changes in fundamental ways - perhaps there will be motivation to educate the child and consequently lift not's to somewhat's. Education instead of crime.

What say ?

 

"Our sweetest songs are those that tell of saddest thought"

Looking back at all my brushes with poetry (all credit to ICSE) - Shelley's line remains the most memorable I have encountered. If you woke me in the middle of the night and told me - "Quick. Name a poem. Any one"; I would disorientedly mumble "To a Skylark ?". In my morning walk today - I suddenly realised why.

This line bridges my two worlds. Music and Management. The greatest musicians of our times sang of change. The greatest businesses in the world speak of change (they tend to call it transformation). Why does change so effortlessly cross the chasm between these two discordant worlds ? (and they are discordant - just listen to eminem). Perhaps the link is more fundamental than change - perhaps it is an eternal dissatisfaction with the present - the need to always quest for the better. Therefore the present can only lead to the sweetest song - if the present is NOT the brighter future.

A band is the most self critical system in the world - especially if it (as we do) spends most of its time creating original music. The truth is very far removed from the popular perception of musicians as easy going, laidback types - the jar of a wrongly struck chord, an off harmony or incorrect tempo on the bass drum brings out the worst in the musician. Especially in your own band. The paranoid search for your OWN sound, that one last troublesome inversion and the irritating setting, re-setting and complete redoing of leads and tones point to only one thing. Eternal dissatisfaction. And here's the interesting part. That's the only thing that goes against the system.

The system always seeks equilibrium. The right way to do things. Satisfaction. Unfortunately - the world's gone mad (we live in the new normal after all). There are many right ways to do things these days - unfortunately there still remains ONE wrong way. The system. We are in a world desperately seeking creativity and innovation - and the system ain't got that.

I just wrote a new song. It's called Welcome. I'm dissatisfied with the chorus. The song moves to Raja (on lead) - he sorts out the chorus, but is dissatisfied with the monotony in the verse. Nitin (on rhythm) - creates a variation for the second verse - but HE's unhappy about the lack of a bridge. Avik (on keys) comes in with a bridge..... And so it goes. Individually we still remain slightly dissatisfied with Welcome. But Contraband really enjoys playing it.

Hmm.. That adds another dimension. Dissatisfaction allied with collaboration between like minded people shoring up each other's weakness. In a globalised, complex and challenged business environment - that sounds like something that could work ?

If we all live for a better tomorrow - what does that mean about how we should live today ?

Lets begin by putting music back into management. Even if it wasn't  there in the first place.

 

Our world is irrevocably changing. Especially if you are in the technology industry. Heretical murmurs are already prefacing the Apple vs Android battle, and as usual this is only the tip of the iceberg. If true -  lifetimes in business may truly be compressed into single decade chapters. Here are 10 harbingers of massive change :

1. While global recovery is on everyone's lips - the US labor market refuses to show any signs of recovery. The unemployment rate inched up to 9.7% in August 2010 and remained at over 9% for the sixteenth consecutive month, longest span of elevated joblessness since monthly records began in 1948. This has several implications on political will - just one of which got revealed when...

2. The US Border Security Bill specified that visa fees would be hiked for those employers who have more than 50% of their US based employees on the H1B or L category visas. Pretty clear non tariff barier creation for Indian IT companies - thus enthusing supporters of employment protectionism and leading to ...

3. The state of Ohio restricting offshore firms from competing for public sector contracts in the state. And as the developed world starts signaling protectionism...

4.  China overtakes Japan to become the world's second largest economy - and BRIC economies GDP (which was half of Japan in 2000) becomes twice Japan's GDP. This extraordinary shift resonates through corporate corridors as well...

5.  In 2000 only 16% of the Fortune Global 500 (G-500) were headquartered OUTSIDE the G-7 countries, and China had only 10 companies in the G-500 list. The comparable numbers in 2010 are 32% and 46. This development presages a demographic shift that is still playing out...

6. By August 2010, China had 804 million and India had 670 million mobile phones. USA, Brazil, and Russia ranked 3^rd, 4^th, and 5^th with 285, 214, and 189 million mobile phone respectively. India and China account for 40% of the world's working age population (and climbing). This has obviously not escaped the traditional corporate giants - who fortunately are ...

7. Sitting on mounds of cash. Over 80% of technology companies in the S&P 500 have no "Net Debt". The top 9 US Tech majors (Cisco, Microsoft, Google, Apple, Oracle, Intel, HP, Dell, IBM) in the last 5 years have doubled their cash balance from $ 106 bn to more than $ 212 bn today. All appear to have realised that they need business model innovation at blinding speed - and the only way is to use cash for ....

8. Weird kinds of M&A. Intel used 35% of its cash balance to acquire McAfee for $ 7.7 bn (thats almost 4 times McAfees total revenue !). Intel has realised that the world has moved beyond PC's.  Even more interesting was HP's acquisition of 3Par for $ 2.35 billion at a valuation that was 325x of the companies last year EBITDA !!!! This may well be the highest premium offered in fiscal history. And all this is clearly happening because the markets have already started rewarding brand new business models since ....

9.  Market cap of leading Software as a Service players is on an average 7x their revenues. In spite of the fact that most of them have negative or marginally positive bottomlines. iPhone sales have grown at a 33% CQGR for the last 12 quarters and Apple sold 3.2 mn iPADs in the debut quarter. By all counts mobile internet is ramping up faster than desktop internet ever did - and those aligned to this truth are being rewarded. Right alignment is beginning to show significant market shifts as well....

10.  In the last 4 years, Oracle's new license sales in Applications has hit a CAGR of 13% - thats over 6x higher than SAP. The ERPscape is beginning to change in fundamental ways - SAP used to dominate the Apps license market outselling Oracle by 3 times in 2006. SAP now outsells the big O by only 1.5x - that's just in 4 years.

Lets chuck all this stuff into the IT services cauldron. A cauldron in which I had already put in diffusion between Global MNCs and Indiant IT, new kinds of stack based players entering, the death of the mid-cap,  the increasing power of the business buyer and the vastly different kinds of new markets that are opening up. As I look in - I find one answer staring back (and no - its not 42).

Lets call it The Great Global Re-balance (for effect, if nothing else). Let me explain :

1. The Workforce : We definitely need to re-balance our global work-force and significantly increase local hires. The good thing for HCL is the local workforce has already hit 30% in the US and 50% in Europe.

2. Geographic Portfolio : There is a significant rebalance required between Emerging and Mature markets from a demand perspective. China for China and India for India need to be a geo-mantra.

3. Partnerships : with the significant industry shifts we are seeing - partnerships need to be leveraged to take innovation "beyond IPs" to cohesive, ecosystem oriented solutions. IP initiatives need to be driven (also) with a mindset to investing in GTM with select partners.

4. Business Investments : The time for investing in filling capability gaps may well be past. There is a significant re-balance required between short-term and long term growth. With technologies like cloud computing and mobility disrupting the entire market - there has never been a time like now to invest in absolutely breakthrough innovation.

5. Services Portfolio : For those who have not already achieved balance in their services portfolio - this may be the toughest re-balance of all. Without Infrastructure capability - touching the cloud becomes difficult. Without mobile apps development - and potentiall engineering capability; the mobile revolution may pass you by. Without the ability to combine Enterprise Apps and BPO - you may not be able to create relevance to the business. This will be the mother of all re-balance ; and one (fortunately) where HCL is well placed.

6. Verticals : While FS, Telecom and Manufacturing have continue as giants - explosive growth is now in Energy & Utilities, Media & Entertainment ; and even the public sector. The emerging verticals have the growth - the mature verticals have the scale. Which do you target ? Its just one more re-balance factor.

Recently I was in Goa for a quick getaway with the family. When you drive from Calangute to Candolim in Goa - you need to drive around a church which is bang in the middle of the road. My daughter asked me a question - "Why did God put this church in the middle of the road ?". I was hard pressed for a tenable answer - in desperation I grasped at a slim cord. "God always likes the middle path" - I told her.

Actually its true. Specially in the IT Services industry. Now.

Ever since I took over the head of marketing position - I have been quite rudely jolted out of my comfort  zone. When you dont know what you dont know - navigation becomes quite tricky.  My sense of definitiveness has certainly reduced - and at least for the first few months of the 2010 calendar I was searching for definition. That's when I stumbled upon the knowledge treasure trove that IT service marketers have access to (which I was not really leveraging when I ran business marketing).

This is a knowledge industry. That defines the currency of conversation. Analysts, Meda people and advisors constantly  deal in this currency and bring extremely powerful insight. The minute I made this discovery - I have sort of institutionalised a quarterly insight trip. Meetings with many knowledgeable people in and around the industry really help sharpening thought and arriving at conclusions.

I am in the midst of an insight trip right now - with a simple question. What's the future for Indian IT ? While I will not claim to be definitive - but I have a fairly clear hypothesis by now. I think its time for Indian IT to get worried. And I do not see that happening.  There is a growth vs margin debate - which in the minds of Indian IT has solidly tilted towards margins (we've arrived - have'nt we ?). I am beginning to believe that this is premature - just like a pilot accelerates through the clouds to break through beyond; I believe our industry needs to accelerate. Let me try and record why...

Lets start with a very interesting piece of Gartner data. Global IT services market share - and the share of Indian IT players from 2000 - 2008.

The pie on the left represents 2000 data. Indian IT cannot even be seen (it was actually 0.1% and lumped into "others"). The pie on the right is 2008. Notice the difference ? Hallelujah - we have reached 2.2% ; growing share in the global market by 210 basis points in just 8 years. Look a bit deeper and a different story emerges. Note IBM. 5% share in 2000. 7.3% share in 2008. In the same period - IBM put on more share than all of Indian IT combined ! And this was when IBM was not good at the offshoring value proposition which drove growth for us. Starting 2010 (with IBM having more than 100,000 employees in India) - what does it portend for our competitive environment ?

As a somewhat rudimentary student of economics, I have always been led to believe that super-normal margins are possible only for monopolies or if significant entry barriers exist. Indian IT has been fed on a rich diet of 20% margins - and appears loth to give this up. Unfortunately - not only are there few entry barriers, the kind of players either making or contemplating entry is quite scary.

The blurring of the hitherto independent towers of software, hardware, services and telecom are introducing a new set of 100 pound gorillas to the industry. Perhaps this will take time to play out - but we have already seen the speed of movement in just a decade. It would seem advisable to approach 2010-2020 with some wariness.

While all this interesting stuff is happening on the supply side - some very fundamental shifts are taking place on the demand side as well. When I say this - it may appear simplistic. But hang on.

Business is playing a major role in IT buying today. Large decisions are not just going to the CFO and the CEO. Most are also going to the Board of Directors. This is unleashing two implications for the industry.

The first is that business leaders are not really familiar with Indian IT brands. Some of our brands are strong with IT and Procurement leaders in the global markets - but when business enters the picture, an Accenture or IBM have far greater brand appeal.

The second interesting implication is best stated with something that was announced just a couple of months ago. Philip Clarke (the CIO of Tesco's) is slated to takeover as the CEO by March 2011. Can you believe this - a CIO will soon be the CEO of a $ 60 BN GBP Company !  IT leadership which is business aligned is going places. IT leadership which keeps the lights on is not.

Note that against this backdrop - most of Indian IT is talking about Cloud Computing, Virtualisation, Mobile computing - and other such trends. The unfortunate part is these are technology trends. The cloud is an alternate delivery mechanism for IT. Does business really care ? It's like asking the business if it wants water out of a hose pipe or a tap. The answer will be the same - whatever gets the job done at the best possible cost.

It is possibly time to look at branding as well as fundamental R&D to link IT to business impact....

Lets take a look at some reliable predictors of the future of the industry. The Nasscom-McKinsey study has historically been quite accurate in predictions. In the recent 2020 Study they released, a very interesting point was made. While the global sourcing market is predicted to grow from $ 500 BN to $ 1.5 Trillion by 2020 - 80% of that growth is predicted to come from new markets (verticals, geographies, customer segments and so on).

For an industry extremely used to doing business primarily in Financial Services and Manufacturing with US based Fortune 500 Cos - this is going to call for an entirely new set of service capability and market addressal mechanisms. It would be interesting to see how many are investing in these...

Lets widen the hunt now - lets look at overall global industry. For about a year at HCL we have been talking about the New Normal. In fact - that was the theme of the HCL Global Meet at Orlando in April 2010. To understand this phenomenon I would highly recommend a quick view of the curtain raiser film we did for the event (trust me you will enjoy it). Heres the link -  http://www.youtube.com/watch?v=UVpar6pSyzQ

Pre recession - 80% of the S&P 500 companies used to grow. During the recession this reversed - only 20% of them showed growth. In the New Normal (pretty much April 2010 onwards) 80% of the S&P 500 are back on the growth track. However, the average growth rates are about 40% lower.

The problem in the New Normal is - no business leadership will settle for low growth. We are now witnessing a titanic struggle across the best companies in the world to innovate their business model  ; create the next new channel, the next new product, target the next new segment and so on. This actually presents a tremendous opportunity - never before has business been so keen on engaging in discussions on how IT can help / drive business model innovation. The question is - are we capable of running that discussion ?

While I may still not be very clear - the conversations I have been having are bringing relevant questions to my mind. I also have 5 hypotheses which I believe will drive breakaway success in the Indian IT industry. I may be entirely wrong - but thankfully I now have a point of view :

1. I am very keenly engaged now in the concept of Momentum. I will explain this through an internal example. We went to the Bloomberg database and discovered that 3307 companies are listed across the world in the technology space (Hardware, Software and Services). We first applied a filter of a 30% CAGR over 5 years (thats 2004-2009). The number came to 302. We then looked at Co's whose revenues are more than $ 2BN. The number dramatically dropped to 11. We then applied a final filter of market cap at $ 5 BN or more. That leaves ONLY 6 companies ! Out of 3307. Apple and Google make it to this list. The only two Indian IT companies are Cognizant and HCL Tehchnologies. It is interesting that most tier 2 Indian IT companies will not be able to hit momentum - they lack the scale. And most Tier 1 do not seem sufficiently focused on growth.

2. I believe (and am excited by the thought) that Branding is the next big frontier. I have spoken about how to brand before in Marketing Muse - but the time has now come. Marketing Muse rejoice.

3. I briefly mentioned it in the passing - but its too important to ignore. Investment in Core R&D (thats not swapping incremental IP from client experience) to link technology to business impact is going to be of enormous importance.

4. Service Portfolios now need to be filled out. Indian IT cannot anymore afford capability gaps when faced with the global majors.

5. By now Indian IT has developed a certain core competency in the recruitment and management of enormous numbers of employees. This competency will now require formal fleshing out and conversion to a source of competitive advantage vis a vis the rest of the world.

These are 5 things that immediately strike me. And I haven't even understood the Eurozone crisis yet....

Time to soldier on.

 

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Here’s the very interesting thing about life beyond 2010. Technology is making humankind more human. That’s because information is so freely available – that there is no point being anybody but you to the external world any more (warts and all). And this has very fundamental implications for our work life. The implications are two-fold :

1.       If our digital identity will not allow us to pretend to be somebody else – how we live our personal lives will have significant impact on how we live our professional lives.

2.       As technology automates more and  more transactions in the work-place, what we do will have to go beyond the comfort of daily transaction and evolve intellectually. This also means – what we do and how we do it will keep changing continuously .

How are we going to handle this complexity ? We need to be both better human beings in the workplace – as well as adjust to the fact that every day the way we measure our output is going to change. The answer is simple…

It lies in values – not numbers, being used by us to both guide and measure our work-lives. I have 10 values to offer today – these have been useful for me in navigating this change. You need to think about the ones which are suitable for you. Here’s my list….,

10 / 2010

1.       Impact Not Transaction : A teller sits at a bank window and transacts the day away. He will do this for all his life and retire to a pension. Even if you are satisfied with such a future – automation will take it away. Technology will also take away the power of “being in office till late”. You actually don’t need to be in office at all these days to work. So  - how do you grow and succeed in the workplace ? Have you ever thought of a pebble dropped in water ? Ripples carry the impact far and wide. Every pebble you find will your impact across your organization – and sometimes across the world. 

2.       A piece of You. Not You as a piece : Remember the famous cover of Time last year ? It was just one part of the truth. Yes – the digital You has become the most powerful individual in the world. What responsibility does this bring to the professional You ? Your power only exists if others choose to participate in your sphere of influence. Hierarchy will no more drive reporting structures – instead this will be driven  through value and originality. I remember hearing Gary Hamel once narrate the story of W.L. Gore. “When I visited W.L. Gore”, said Gary, “I found no-one had any designations printed on their visiting card. I asked them, how do I spot a leader ?”.  They scratched their heads, thought for a while – and finally an employee said “If someone calls a meeting and people turn up – you know you have a leader”. Originality and Value. Think about it. 

 

3.       Run the race against yourself : Many of my team members speak about their dissatisfaction that someone else got a promotion, pay hike or some form of recognition they did not get. Interestingly, the only people who get hurt by these comparisons is the individuals who make them. We progress only when we play by rules that make achievement difficult – but deeply satisfying. People who play by the rules of the pussycat will continue to see the achievement of the lion in others – and their comparisons will become exercises in declining self-esteem. If you really see the lion in the mirror – the only rules you should play by are that of your lion. You will know your own performance and achievement – and this is far more satisfying than any form of external / relative recognition. There may be the occasional year in your career where only YOU recognize the Lion within – but I promise, in the new world these will be rare instances. 

4.       Knowledge and Skills are irrelevant without Insight :Two stories have always fascinated me from the Indian market. One was the story of S.M. Dutta (then Chairman of Hindusthan Lever) who during a visit to a remote village was told by the women there that they could not buy shampoo bottles as there usage was infrequent – and it would be more convenient for them if they could buy shampoo for each consumption. The shampoo sachet blew the category open. The second is the story of MM Kothari who was a simple cycle salesman in Lucknow. He observed customers queueing for Paan in shops and thought there could be a more convenient way. Thus was born Pan Parag – and Mr. Kothari built a large company as a consequence. The interesting thing was – in the first instance a man as knowledgeable and skilled as Mr. Dutta was able to generate breakthrough only by being in a small village. In the second instance, a gentleman with no formal knowledge or training was able to create business breakthrough because he was in the market. The truth is simple – breakthrough cannot be created sitting in ivory towers. Breakthrough is a function of insight – and this can only happen by being closest to wherever the action is in your business. And in the new world – the demand for breakthrough from each of us is not anymore once in a lifetime. We need it everyday.  

 

5.       Earn a Seat at the Table : As work life gets more challenging a lot of people simplify their own existence by doing lower value activities – like co-ordinating stuff. This is especially true for people in support functions like HR , Communications, Admin etc. Such people then discover they are not really respected by more business aligned people – and therefore do not really command much influence. The lack of influence then starts bothering them – and they do not achieve fulfillment in work life. When I speak to people like this , I ask a basic question. Would you rather have a seat at the dinner table of business , or are you satisfied being a waiter ? The responses I get are largely around – “Because of my job , you don’t really expect me to understand the business ? “ Whenever I hear this I think of Stephen Hawking. No disability could be worse. There is no table in the world he cannot sit at. If you use your mind well – influence will follow.

 

6.       Think Outside In : Most of us think inside out “I do all these things – therefore I must be doing a good job. Things change when we start thinking outside in “If I could not see all these things being done – would I still think I do a good job ?”. Big Difference. As producers we are exposed to all we do. As consumers we are exposed to only things that cut through the noise. Here lies the mystery of perception – “I think I’m damn good – why doesn’t she?”. You must realize – what you do is not good enough to cut through the clutter. And remember – in today’s world there is truly a huge amount of information clutter. As a marketer – I always think about something called affirmative action. Any marketing task has an audience. Affirmative action is when that audience begins to realize that you are marketing to them. There is no fun in action till it turns affirmative – yet many of us think that action is good enough. Think Affirmative – think outside in.

 

7.       Leadership is the art of self-redundancy : Knowledge is power - right ?
Wrong.
A colleague asked me this question once (in different words). "Krishnan - I have spent years picking up these skills. What happens to the time I spent if others learn it easily ?". My answer was simple. “If others do not learn this skill – how will the organisation allow you to grow?”. The simple truth is – you will only grow if you teach. Remember, to reach the next step; you have to vacate the one you are currently on. And you can only vacate it if you can pull someone else up. For those who master this art – growth will be rapid and effortless in the new world.

 

8.       You HAVE to push the envelope : Michael Phelps, Sergei Bubka, Sachin Tendulkar and even Aamir Khan. These are people we celebrate for pushing the envelope even after it has been pushed beyond limits. They set impossible records – and defy them to break them again. They do not sit on laurels of the past and that’s why the world loves them. For everything you want in a career – recognition, fame , fortune et al; you have to remember this. To be a superstar in any circle – however small you need to break through the walls of past achievement. The new world unfortunately has a short memory span. The past will not guarantee the future.

 

9.       Detail, Detail and Detail : Remember the ripple analogy for impact ? There is a flip side. Everything you do today has the potential to ripple. And things can potentially go very well – or very wrong in the blink of an eye. Witness Tiger Woods. That’s why it is wise to look at every project we do in as detailed a fashion as possible – use  mind maps, think through scenarios, anticipate every possible outcome and plan to maximize the benefit out of all of these, while minimizing risks. In the new world – the old story of spending 90% of the time sharpening the axe allowing the tree to be brought down in only 10% of the time is very true. However, it ‘s  more like 10 trees can be brought down in the 10% time.

10.   There is no trust without being yourself : In work life usually the real you is left outside the office like a coat hung on a stand. Somebody else sits in your chair and does stuff – wears the coat again and goes home. This aint gonna work in the new world. The only reason I can attribute this Jekyll and Hyde problem to is fear. Fear of hierarchy – fear of organization – fear of peers – fear of subordinates – fear – fear …… There was this very interesting sequence in the movie 3 idiots where Sharman Joshi does a job interview with unbelievable honesty and finally lands the job. That scene is actually a new world truth – you will succeed at work because of who you are, not who you think you should be. That’s because trust is a very precious commodity in the new world.

 

Every morning in my car I hear the RJ on some FM channel referring to listeners dragging themselves to office wearily – especially on Monday mornings. That really sounds silly to me – we spend most of our lives engaged in our work. Why do it if its so terrible ?

 

So here’s my 2010 resolution. A simple solution to a very complex problem.

 

Lets carry Joy into work. Its my life after all.

Between a number of disparate activities - planning our annual global meet, a positioning articulation for our consumer services vertical and a number of customer conversations, I am beginning to find numerous sparks blending into the light at the end of the tunnel. The thought is complex - but its a marketing muse task to simplify it. So lets have at it.
I have referred in the past to the fact that the recession was brought on us as a consequence of developed world consumption fuelled by unreal feelings of wealth. The bubble burst - taking all that wealth with it, and the tailspin began. An interesting piece of research by the team shows that a year ago, in the S&P 500, 80% of companies were used to positive revenue growth. In mid 2009 this reversed to 80% actually demonstrating negative revenue growth. However, the story does not end here - the best analyst estimates indicate that by mid 2010, 80% will be back on the growth path. Then what's the New Normal ?
The New Normal is simple. In the old normal - 50% of the S&P 500 were used to > 10% growth rates. This will halve to 25% - meaning that the world of business will either have to reconcile to a hindu rate of growth; or truly engage in disruptive business model innovation to buck this. How will they do this ? This is where I want to ramble and talk about a number of disparate stories.
Facebook will soon become the largest country in the world. Coca Cola is today the third largest music retailer in the UK. 95% of music downloaded last year was free. Bottom of the pyramid market facing innovation has driven India to the top of Nokia's global agenda. The US will not recover without the chinese consumer. Blockbuster vs Netflix has demonstrated that real estate is now digital and not physical anymore. The rockstar status of micro-finance has demonstrated the power of business lies in empowerment. Governments want to control salaries in the financial sector. Google buys Gizmo5 and takes position in the telco race. Amazon becomes one of the largest retailers of diapers. Noble intentions win the Nobel prize - more importantly, the prize becomes a blot on the Obama escutcheon. The world's going crazy - but in a nice way.
Thats because its back to the consumer. It's over for the middleman. Bucking the growth trend will mean finding new consumers and developing a new kind of business to entice them with. And all business value will lie in the relationship between the business and the consumer - intermediation (for instance the financial services industry in the old normal) will no more be a source of value. The world is going 1on1 and obfuscation is out. The simple truth is - if complex derivative products had not concealed it, you and I would have known that the house which was bought at $100K could just not be worth a half million. If all housing purchase was done only for the purpose of living in - it is very unlikely that speculative bubbles could be so easily fuelled. In essence, the game is with the consumer - and not the customer. Businesses which smell the coffee will realise that there is no value in inventory (which is where intermediation plays a role) - all value lies in the act of consumption.
Lets call this the 1o1 Business. Its that old mom and pop store - which continues to battle giant retail quite well. With one fundamental difference. Technology has suddenly made the 1o1 business scaleable. And 1o1 is happening first through content. Economic theory has historically focused on transactions between the producer and consumer as individuals - the concept of the firm / organisation was not allowed to complicate further an already complicated subject. Theory has suddenly become reality - when what is produced and consumed is content. People who like books go to Amazon and exchange content. Out of this a phenomenal business was built - and the story is not over.
The 1o1 business is a platform. One that brings together like-minded indivuals globally in a content sharing experience that is compelling. And then proceeds to convert the content sharing experience into a social interaction. And then proceeds to monetise the experience. Facebook has already done the first two - it is best not to dwell too long on what will happen when they crack item three.
Just imagine the power in the 1o1 business. Pun intended. Energy is becoming a passionate subject amongst people. A power company that focused on bringing together a community around the concept of smart energy - could then become a mart for all kinds of green products. Now think photography, music, sports et al. I-tunes is wildly successful - but has yet do all three 1o1 items. The rug can still be pulled out.
Because its back to the consumer. And the producer.
And they are 1o1.