Businessworld

Amazon’s boxes are building our world. It is a behemoth in the network economy. But the networked economy is a part of the networked world. In every way, we are reliant on networks. Phone networks, web networks, social networks, alumni networks, capital networks, official networks, political networks, religious and spiritual networks. Networks have peculiar economic characteristics. This is easiest to see in products like the telephone, fax, a PC, the local courier operation or the internet. One phone or fax or email address is useless. Two units have some value. Thereafter, any increase in the network size has a more than proportionate increase in value to each user. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Bob Metcalfe, the inventor of Ethernet postulated the Metcalfe’s law in 1980 : the value of a network equals n squared (n X n), where n is the number of people in the network. Thus a 5-person network is worth 25, but a 10-person network is worth 100. A linear increase in membership means an exponential, geometric increase in value. Network economics therefore exhibits an extreme form of increasing returns, both for all members of a network and for leading suppliers to the network. An expanding network becomes a self-reinforcing virtuous circle. Each new member increases the network’s value, which in turn attracts new members. Generally, network members are unpaid but well rewarded evangelists of the network. Networks typically spend quite a while reaching their tipping point, and then there is no stopping them. Traditionally, value comes from having a closed, proprietary system and from scarcity. No more. With networks, value comes from openness and from proliferation. The more allied it is with other networks, the more valuable a network becomes. The gain in coverage and value creation far exceeds a loss in the exclusivity of value capture. The more you have, the more you want – the exact opposite of diminishing utility. The more we make, the easier and cheaper it becomes to make more. This is the beauty of network economies. It is both deflationary such that prices come down for ever and expansionary such that more and more useful things are created and used. The frothy excitement from investors in general and markets across the world to the possibilities that networks provide has led many observers to feel that leading players can come close to generating almost infinite returns. One reason is the share of low-cost of internet transactions. As the value of network increases with scale, so the average cost of enabling software declines. The marginal cost is almost zero. Non-network businesses may have high fixed cost, but the marginal cost of meeting customer demand never falls to zero – After all sales, marketing and customer service are all fairly extensive operations. By contrast, networks – and in particular- the internet may add customers and sales at negligible extra cost. The world was disrupted by Amazon. This was because the Internet allowed Amazon to separate information flows from physical flows. A store that sells books is a physical entity that has inventory as well as an area of exhibition where what’s on the shelves is available and consumers may interact with it in shop. But the internet separates the two – the storefront supplied the information without any involvement of physical flows and therefore it could have huge stocks with zero inventory, thus pole vaulting over the traditional trade-off between cost and choice. It also created the live reality that consumers of information also became unpaid producers of information. Being adaptive, the cost of cross selling different products decreased dramatically with the internet. When one is selling a flight ticket, one can very easily sell hotel rooms, travel insurance, car hire and umpteen other services. The value of a loyal customer base becomes multiplied by an engaged loyal following. Network effects are reaching across the business world. An array of traditional and new companies have put network thinking at the core of their business model. The results have been a mixed bag but it is clear that the pace of evolution of technology affords us no luxury of a U-turn. The birth of millions of new online companies and the transformation of existing businesses has been made possible thanks to the Internet. Networks have enabled existing organisations to adapt to the rapidly changing market conditions. The new internet world has given new meaning to ‘share’, ‘search’, ‘like’, ‘connect’ and ‘viral’. The durability of capitalism has been based on its inherent adaptability. So long as sanctity of contract, private property, profit and growth are intact and can align with privacy and democracy we shall find a better world via the internet. http://www.businessworld.in/article/The-Network-Economy-And-The-Boundless-World-Of-More-Is-Merrier-/09-11-2020-340714/

Strongman British Prime Minister Harold Macmillan – who was admiringly called ‘SuperMac’ – was once asked what he feared. “Events, dear boy, events”, he said. Throughout history, even the most confident and successful empires, corporations and power structures have been dragged down by events. The COVID-19 pandemic is an event of global, shape shifting impact. Perhaps the biggest crisis we have faced. Because of the enormity of the challenge, confidence isn’t what it used to be. Egotism and bluster are not endearing in this context. Everything around us has changed – relationships, relevance of economic goods, route to market, ways of working, use of technology, means of learning and much more. But when it comes to hierarchy, not much has changed at all. Our environment has changed but we have not. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] From the Stone Age to the present day, man has been a sucker for hierarchy. The desire to follow confident leaders and to find security in a subordinate status relationship seems to be a lingering and pronounced trait of our primitive origins. As hunter gatherers ,chances of livelihood and security increased with attachment and deference to a leader. Being meek and docile was a good strategy for survival. History also bears out this human predilection. After every revolutionary attempt that was meant to end hierarchy – be it the French or the Russian revolution – there emerged an even more damaging hierarchy. Even the emergence of the modern, flat, informal, knowledge based organisation has changed more of the form than substance. You may call a boss by their first name but that doesn’t change the power a boss wields over your life. In fact, the more popular, appealing and acclaimed a revolutionary change was, the more suffocating the hierarchy it produced. The 20th century was both the century of democracy and the common man and the century of the psychopathic dictatorial leader. Just three sociopaths – Stalin, Hitler and Mao, put together – killed more than a hundred million people. In every form of organisation and society – liberal, democratic, humanistic, profit seeking – wherever official hierarchy is abolished, unofficial hierarchies spring up and flourish. It is human nature that status is both sought and acknowledged. Our enduring taste for hierarchy is an anachronism in the era of the individual knowledge worker but still near impossible to extirpate. It is destroying value and imposing a dictatorship of both the ends and means. To understand it better, we have to firstly understand conformism and herding. There is an inherent tendency for humans to conform internally to known groups and be suspicious of outsiders. Within the group, higher status individuals are imitated and there is a natural tendency to respond most alertly towards those higher up in the hierarchy. Any sense of individualism is knocked out early. The individuals who survive and thrive are docile followers and confident leaders. Groups that thrived were those with the greatest cohesion. Therefore mindless conformism became the norm. Even today from being fans of the football club to following absurd fashion and worshipping rock stars following the herd is as popular as ever. It is not merely a matter of taste. Even in rational domains such as electoral choices, responses during bull and bear stock markets and balancing social or religious diktats versus evidence from science, we tend to follow the herd. Many authoritative pieces of work have shed light on this phenomenon. William Whyte wrote a business bestseller in 1956 called ‘The Organisation Man’ and in 1970, Robert Townsend penned a popular satire called up ‘Up The Organisation’. Townsend concluded that mediocrity was preferred and perpetuated so that the leadership could have lasting dominion over man. Trapped in the cubicle farm and into boxes of an organisation chart, they remain in place due to need, ambition or mindless habit. Richard Pascale in his book ‘Managing on the Edge – How the Smartest Companies Use Conflict to Stay Ahead’ – estimated that half the time that any contention arises, its potential value is totally lost because eventual conflict is avoided. The key weakness of most organisations is their inability to tolerate conflict, foster debate and harness the outcomes for improvement and growth. Even within organisations, cohesion is seen only within functions, subdivisions or smaller teams. You rarely find it between functions or geographies. From a business perspective, the most heartening fact is that human beings have neuroplasticity. It means we can rewire ourselves and learn, relearn and unlearn. Moreover we can learn and transmit learning. Therefore, our genetic predisposition is important in determining our behaviour but not necessarily decisive. What is important is self realisation. If we realise we have biases, we are capable of correcting them. My educated guess is that on the other side of this crisis, more than washing our hands and wearing masks, the bigger legacy will be that business executives need to take change as a given. The speed of cultural evolution and our need to rely on neuroplasticity will increase. We are in a post-industrial world beyond mechanical, cause-and-effect models and we must move to fluid, network based biological models. Complexity, heterogeneity and size are compounding forces. The larger, more complex and heterogeneous the organisation, the more it sees internal conflict. We must know why it is difficult to change and still do so in our own best interest. Our natural inclination may not be our best friend but it need not be our cruel master. That much self-interested willpower is desperately needed. http://www.businessworld.in/article/The-Unbroken-Hold-Of-Hierarchy/03-11-2020-338674

Early in life, I had many opportunities to visit many wildlife reserves in India such as Ranthambore, Corbett and Sariska. Looking for the elusive tiger made me understand the concept of territory. I came to appreciate its need for large contiguous areas of habitat which supported its requirements for prey. I realised two tigers don’t share turf. Survival in the jungle is about conflict and competition. It has a parallel in the world of business which is often overlooked. This idea has a metaphorical and conceptual value. There is an inverse correlation between sharing territorial space with the largest competitor and return on capital. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] The appearance of competition displaces a brand or business off its natural trajectory. To then survive, protect turf and continue to grow, it needs to act. Pricing power is eroded and margin is shaved off. The impact is proportional to the proximity and power of competitors. Weak conflict indicates a distant or non-interacting competitor. Strong conflict implies a competitor who is eyeball to eyeball. The most obvious case of imminent conflict is if the competitor is in exactly the same quadrant in terms of size, offering, customer type and geography. Conversely, if the customers, products, geographies and strategic intent are different then such competitors are distant and dissimilar and may fundamentally not be interested in conflict. As in the wild, in the world of business too there are places that are free of jungle style Darwinism. These white spaces can be defined as entire sectors, geographical markets, segments or portfolios where competition does not operate. Here, margins are limited not by competition but by what customers can afford. Such a non-competitive space is as idyllic a place as can be imagined in a world of commerce and capital. It is rare to find but it must be considered and hoped for in every business or market opportunity plan. Since competition creates an existential crisis, it follows that we must always know how near and large our biggest competitor is. An eruption of conflict between two prime competitors will throw both off course but the question to ask is who has more to lose? A small but well-resourced competitor that is very adjacent may give more trouble than a much bigger, richer and more successful corporation that may have shallow interest in one’s market. Conflict is closely linked to turf and territoriality. Is conflict always bad? Not really. Looked at from the perspective of the resulting market efficiency and creation of customer value, competition is usually beneficial. But because it depresses margins, it is bloodletting where the dominant incumbent is concerned. It is from this profit impact perspective that competitors – both big and small – must the mapped. One has to see their competence, resources, target markets and modality of serving their customers. If one cannot defend, one has to move away. Impact of the relative market share on competitive intensity is a logarithmic rather than a linear relationship. Managing it calls for excellent manoeuvring. If one can increase the distance away from a big or small competitor, one can protect pricing power and margins. The potential for conflict decreases more than proportionately to the distance or the diminishing relative size of the competitor. There is a well-known correlation between high market share and profitability. However this relationship is also not linear. The greatest benefit in profit terms usually comes from increasing market share in markets where one is already very strong. A 10% improvement in relative market share produces a much greater than 10% increase in profitability. A competitive white space has to be secured by increasing relative market share. Plainly put, sales have to increase faster than of competition. One way of doing this is to find new customers. The easier way is to sell more to existing ones or at least at a rate faster than the competitor. Further one has to increase the retention of customers one already has. This needs empathy and an ability to serve customers well. It calls for brand esteem and good reputation. To make a white space possible one has to commit financial resources and demonstrate staying power in the market. Through a superior understanding of market and consumers one has to land better products with fast delivery, superior marketing and lower prices. In principle it sounds simple. One avoids conflict or wins by differentiating oneself and accelerating the stages of value add. But it is easier said than done. It requires a corporate general of genius to execute and bring it to reality. I can hear the old forest guard in Ranthambore saying “Listen to the call of the deer, the Tiger is on the move” … http://www.businessworld.in/article/Competition-And-conflict-The-Market-As-A-Jungle/29-10-2020-337236

Compare the first Fortune 500 companies list of 1955 with the Fortune 500 list 2019. There are only 52 companies that appear in both the lists and have remained since inception. That’s a remarkable attrition rate. Only 10.4 percent of the Fortune 500 companies in 1955 have remained on the list. The rest have degraded, gone bankrupt, merged with or acquired by others. ‘In Search of Excellence’ – by Tom Peters and Bob Waterman was published in 1982. It listed 75 corporations as exemplars. Just 2 years later in 1985, Business Week ran a cover story titled ‘Oops!’ that recounted the fall from stardom of many of these 75 companies. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Through the years, the troubles at revered companies such as IBM, Polaroid, Motorola, Maytag, HP, Delta Airlines, Kodak, Raychem, Amdahl, Kmart, DEC and others have been the stuff of case studies on topics ranging from strategic mastery to scandal. The modern Corporation is an institution which is most exposed to failure. According to a famous study by Arie de Greus, the then planning director at Shell, the average life expectancy of a multinational company is around 40 years. This research was conducted in the late 1990s but the first 20 years of the 21st century have only proven that the mortality of corporations is an even bigger reality now than ever before. My entire career has been working with global brands and companies. I have worked in great multinationals such as Unilever, Visa and Diageo. I have had the privilege of managing global brands in highly competitive categories. I sincerely believe that corporations should be exposed to natural competition and the risk of failure. Otherwise they will not be efficient and the fruits of their sustained success will not accrue to society at large. Capital is the accumulated saving of society. It must fetch return. As a brand builder, I see brands potentially outliving parent corporations. To me, the important question is what makes ‘successful longevity’ possible? I search for the answer with a brand based view of the business reality. Companies can live, die, mutate, merge but brands can remain forever. Poor Corporations may kill great brands. Great Brands can never kill good corporations. When markets are very profitable, new entrants are attracted. From having too few firms in the market before long there will be too many. Profits tend to zero. This is theoretical, classical economics and does not correspond to reality. Brands ensure different trajectories for businesses. Financial adventurism, short-term profit mindedness and management myopia can tank companies with great brands. As a general rule, brands help amplify the benefit of the virtuous cycle and mitigate the damage of the vicious cycle in the market. Commodity pricing is a case of a non-branded reality. Margins suffer when there are few barriers to entry and exit. Differentiation is at the core of brand building. This is as much true for cheap motels, unskilled labour, poor farmers selling horticultural produce by the roadside as it is for very rich corporations selling packaged goods, boxed hardware or financial packages. If you don’t have the edge, you are losing control. A virtuous cycle happens when a brand differentiates its product and service so that it can enjoy higher margin than competitors and gain a large market share. The brand with the higher margin can make further investments in scale, technology, innovation to consolidate and increase its lead. It can pay more to get better talent and build more productive systems and alliances. It can afford to advertise and provide better value. This is the secret for successful, profitable companies. This is the reality of increasing returns. The brands which build such virtuous cycles account for the majority of profits in a developed economy. On the other hand, the neglect of the brand leads to a negative or a vicious spiral. Those who are behind fall further behind. Returns get diminished. The squeeze leads to a declining pace of innovation and this in turn erodes differentiation even further. Successful companies and brands can fail because they are unable to retain the edge on learning, adaptation and innovation/renovation. Therefore, the moment the cycle turns to the declining side they are unable to change. Success makes brand management arrogant, complacent or plainly greedy. They ignore new technologies, customer service and innovation. They stop listening to customers and lose empathy. They stop hiring new talent or rewarding productive talent. Basically, they don’t want change. “Nothing fails like success” wrote Richard Pascale in his wonderful book ‘Managing on the edge’ published in 1990. If you have laurels, try not to rest on them. Remember your greatest strengths are also weaknesses. Don’t be so enamoured with what you do best, that you fail to realise that the world around you is changing. http://www.businessworld.in/article/Failure-Is-A-Commodity-Success-Is-A-Brand/19-10-2020-333001  

Why business needs lessons? The vanguard of a battle is an exclusive classroom. Many enduring lessons are learned. Learning is, literally, a matter of life and death. Today, more than ever, business is a battlefield. The pace of change is unprecedented. Information and capital are available to all. The ecommerce disruption has changed all equations. Survival demands a warlike urgency in developing new products, procuring superior intelligence and being on the offensive. But, management structures, information systems and personnel development programs are antiquated. Legacy mindedness, insularity and inertia are taking businesses to defeat. They need to unlearn and learn again. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Why learn from the military Strategy has military origins. The ancient Greek word Stratēgia refers to the art of generalship. The world’s top militaries are management powerhouses. They are unique institutions that have survived over centuries, changed continuously and improved effectiveness. They are home to technical and organizational innovation. The internet owes its origins to a Pentagon sponsored program. The progress of life sciences, aviation, space exploration, engineering, communications technology and system theory owes much to the military. Besides strategy, we must learn from military operations. Consider the Ladakh standoff currently on between India and China. It teaches us lessons.  It is imperative to watch a competitor’s moves in every square mile. Any winning action on part of the adversary means a loss of share. Mass markets must be seen in terms of smaller sub segments. Every hilltop and valley matters. The enemy tests your ability to hold a position, in battle and in market. A cool headed appreciation of aims “No plan survives first contact with the enemy” is an axiomatic truth. Both strategy and operations need a real-time orientation. Everyone must contribute. Decisions ultimately get taken on the ground nearest to the action. A decision architecture must provide for high quality analysis at that level. In the British Army, during military exercises -with shells bursting on all sides- officers were expected to sit down and write an ‘appreciation’ on a sheet of paper spelling out the details of their aim, the factors which affect its attainment, the inflexible and unchanging constraints, the course of action open to them and the conclusion they had drawn. They began by outlining their position amidst a crisis they faced. It could be a sudden enemy advancement, a broken bridge, a destroyed ammunition depot or a full interruption of communication lines between them and their main formation. The real stumbling block was always the ‘Aim’ paragraph. For most officers, it is far more difficult to decide what they were trying to do than to propose how to go about it. As for the factors affecting the situation, they were only relevant in so far as they related to the aim. If the aim itself was wrong, nothing else in the appreciation would be right. Businesses must understand the value of this exercise, conducted in real life situations. The commonest mistake of inexperience is a misjudging the aim and misinterpreting the facts. Men win wars Human resource matters above all. Businesses must attract, train and retain the best. We can learn from the armed forces. Men in uniform are on boarded very young and trained for high stakes roles. They are assessed for teamwork, resilience and mental agility. The Battle of Britain was a military campaign of the Second World War, in which the Royal Air Force defended the United Kingdom against attacks of the Luftwaffe. It is the story of a few intrepid pilots. Winston Churchill said “Never in the field of human conflict was so much owed by so many to so few.”  Corporations hungry to win must develop managers like these fighter pilots. Backed by ground support, alert to active monitoring systems, even a few well trained gritty fighters with a bias for action can turn things around. Even though character outranks ability everywhere, the orientations to command in the various branches of the military have developed somewhat differently. The Navy and the Air Force take a more process-driven approach whereas the Army emphasises individual leadership initiative, collective action, flexibility and quick manoeuvring. An ordnance officer, navigation expert, fighter pilot, intelligence officer or Special Forces commando will each have a very different set of skills. A captain of a $15 billion aircraft carrier will rely on a technology enabled process whereas the leader of a covert action commando platoon may need to change his plan every minute. Above all, a code of honour, pride of service and respect for uniform motivates military men. For this, they are willing to die. Ultimately, it’s a test of apex command Like war, business is a test of the apex command. The larger the action, the more time must go into planning; the longer it will take to move combatants into position, to reconnoitre, to link up supplies and do coordination with other battle formations. To a conscientious commander, time is the most vital factor of his planning. Proper foresight and correct preliminary action must be aimed to conserve the most precious element under his control – the lives of his men. Therefore, he must keep his tactical plan simple and eliminate as many variable factors as possible. He has to look at as much of the ground as circumstances render accessible to him, first hand. The French have a term  – coup d’œil – for a glance that takes in a comprehensive view. Only then can the command to commence battle be responsibly issued. If the business world can imbibe these lessons, we will have a richer, happier and more productive world. http://www.businessworld.in/article/The-Battle-For-Business-Military-Methods-That-Matter/27-09-2020-325195/

Consumerism is an ideology as much as it is an activity. Marketing is what ingrains this ideology. Profit and market share are its targeted consequences In the first two decades of the 20th century, manufacturing in America expanded manifold. Its biggest example was Henry Ford’s automotive giant, the Ford Motor Company. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] A visionary and pioneer, he created assembly line production. Yet, Ford was famously apathetic to giving consumers much, if any, choice. This opportunity was grabbed by Alfred Sloan at General Motors. Since capital investment in manufacturing was a massive investment, it became necessary to accelerate consumerism to ensure payback. It was also necessary that consumerism grew without fundamental, defining, ‘capital guzzling’ changes. The 1956 Chevrolet Bel Air was designed to create an irresistible upgrade. Hereafter, obsolescence wasseeded via sharp marketing. The creation of desire for the ‘new, better and improved’ became the core purpose of marketing second only to awareness building. It helped grow the world economy and utilise the massive industrial base that had been created during the 1939-45 period. It accelerated globalisation. ‘Au courant consumerism’became a catalyst for the private economy. Loyalty was demonstrated not merely through repeat purchase but through the act of upgrade purchase.Self-esteem was redefined in terms of ‘staying forever upgraded’. Of course, planned upgrade is a consumer choice. But, the fact that diminished return was the spur that moved consumers is something that is not much socialised. It is not about the new possession. It is about the endorphin rush. Marketing has associated consumerism with images of modernity, freedom and power. Brands have moved way beyond selling products or services, to experiences. The energy lies in making something distinctive, unique, and ‘worth it’. In 1932, a few years before World War II, an association called “Phoebus Cartel” was convened in Europe. It was founded by William Meinhardt of Osram and Anton Philips, the founder of the eponymous Dutch electrical giant. Its aim was to organise obsolescence. Its method was to impose an agreement on what the lifespan of a lifebulb ought to be. Any manufacturer who defied the cartel would be run out of business. The signatories included the who’s who of global electrical business of the time from GE to Tokyo Electric. It has come to represent the most classic case of consumer action being dictated by large corporations. There is a counter argument in support of this which argues that ,by keeping people buying, the agreement helped save capitalism and democracy when the world lurched into a world war and walked on the edge of economic depression for years. The central idea of Homo Economicus–is characterized by the infinite ability to make rational decisions. The consumer, is rational, selfish and with unbounded willpower to make repeated purchases. Herbert Simon,acritic of the assumption of unlimited information processing capabilities suggested the term “bounded rationality” to describe a more realistic conception of human problem-solving capabilities. It is considered “rational” for people to adopt rules of thumb as a way to lessen the cognitive load. Retreats from rationality emerge both in judgments and in choice. Understanding how judgment moves away from rationality has been pioneered by Daniel Kahneman, Paul Slovic, and AmosTversky. The most significant concepts are ofexpectant optimism, the bandwagon effect ,the ‘availability heuristic’ and the ‘representative heuristic’. Cognitive biases act as mental and emotional filters to external stimuli. We understand things and act on stimulus after interpreting them based on biases. They influence and impair our ability to evaluate information objectively and logically. Of the cognitive biases -from a sociological standpoint- the ‘Bandwagon Effect’ is the most significant. The Bandwagon Effect leads the individual to make decisions based on the opinion and decision of the majority. Loosely called ‘herd behaviour’ it is seen in all phases of human life. It leads the consumer to perceive obsolescence through social pressure, fashion and media influence. People are more susceptible to the herd effect in situations of uncertainty, panic or in times when there is pressure for decision-making. People feel more comfortable and secure when they are part of groups, while the feeling of being excluded or unrecognized is often disagreeable and pressure inducing. We must think long and hard about the phenomenon of upgrade and its moral boundaries. The day is not far when humans themselves will get ‘upgraded’ to superior, enabled versions of their plainer ‘natural’ selves. Anders Sandberg a Senior Research Fellow at the Future of Humanity Institute at Oxford University has called this ‘Speciation’. We need to think long and hard on how to promote meaningful consumerism by blessing it with our spending. Doing well has to mean being well. http://www.businessworld.in/article/Consumerism-Demystified-Doing-Well-Is-Not-The-Same-As-Being-Well/10-08-2020-306876/

-A caravan of Chinese brands desperate for global dominance- Connecting the East and the West, the Silk Road was central to the economic, cultural, political and religious interactions between them. Lucrative trade and exchange of goods and ideas played a significant role in the progress of world civilization. Back then, the world went to China. Now, China wants to access every world market. A new Digital Silk Road is emerging. Chinese brands are using it to increasingly strengthen their reach overseas, competing against each other for growing presence, while generating impact across categories. They are more purposeful and more data-driven, shifting from traditional sectors like Electronics and Appliances to Fast Fashion and Mobile Gaming, and even Social Media. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Powerful brands are emerging, ones that have been able to differentiate themselves from the competition and be more salient by staying front-of-mind for consumers. China has done this riding on its strength in contract manufacturing, advantages of economies of scale, rapid prototyping and even copying of design and technology. Are Chinese brands going to win at the global level? Will they be the engine to propel China’s economic growth in the future? China as a national brand is handicapped by perceptual baggage. Their story of growing economic might and rapid growth of the GDP does not add enough colour to their brand offering. They need to manage diverse global consumers. This is by no means a new occurrence. Low quality manufacturing that matures into leading edge brand offerings has happened previously in Japan and South Korea. Already, many Chinese Global Brands rank in the Global Top 100, including technology leaders Huawei, Lenovo, Xiaomi, giant retailer Alibaba and ByteDance, the internet company with social media platforms like TikTok. These are mostly ‘export from China’ brands trying, via a set of disciplined activities, to gain awareness and consideration with consumers and build social cachet. A few schematic aspects of their journey are as follows Evolving from a volumetric, sales-centric approach to a brand-centric approach. A strong brand that stands for something meaningful, beyond what a business actually makes and sells, can last many lifetimes. There is a compelling correlation between strong brands, valuable brands, and financially successful brand driven businesses. Most Chinese brands think aggressive pricing, promotion and placement make for sufficient brand building. It’s much more complex than that. A brand is an intangible value built over time and includes much more than just advertising. It’s the product itself – the customer experience, the retail design and so on, all amounting to a clear brand purpose. They are also learning that brand magic extracts more from the profit pool. Sheer volume at shallow profit gives no joy. Focusing on storytelling beyond the product. The Chinese are picking up their market performance data and linking it with market insights, trends data and behavioural data. This is helping them identify areas of opportunity by sector and in gauging what consumers really want. They have reached a point in their international expansion where they have to think beyond product and move from shareholder value to shared value. It is not enough to focus on being everywhere and deliver sheer value. To win, they have to move to a purpose-driven storytelling approach.  “Made in China” has to begin to acquire positive incorporeal associations of “Created in China” Localising brand management. Chinese management runs local companies. They don’t hire senior people from leading local brands who know how things are done. This approach fails to get the nuances required to win in a local market. State led enterprises have this handicap of parochial bias. Global multinational corporations don’t –at least not at a divisional or geographical level. Creating compelling, high-quality content. Storytelling is an essential part of driving brand awareness, helping brands make meaningful and memorable connections with consumers, and building loyalty. The ability to target audiences also gives them the opportunity to present content that’s tailored to resonate with specific groups of people – and even individuals. Chinese brands do not currently have positive connotations when it comes to ‘badging for esteem’ and social packaging.. To conclude, as of now, the Chinese excel at disrupting the affordable end of a category due to their value proposition. They come in at a low price and often knock out the competition. However, they are not upping their game on brand aura, socialization, purpose enriched authorship of narratives and premiumization. That is where they face the real test. It is where they will likely fail !! http://www.businessworld.in/article/Down-The-New-Silk-Road/08-07-2020-294982/

Paul Kennedy’s seminal work ‘The Rise and Fall of the Great Powers’ claims that to qualify to be a great power depends on economic and military capabilities and that these two aspects are linked and ,ideally, mutually self-fulfilling. I feel the role of ‘soft power’ is even greater. Military and economic action may not be ‘always on’ but the cultural forces are never at rest. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] China is, in PPP terms, the biggest economy in the world and it is only behind the United States in military might.However the gap in nominal GDP and military power between the USA and China is substantial. So substantial, that the US is not yielding any strategic space. Therefore China will aim to become a regional hegemon first. China’s rapid economic growth is not endless. It has already plateaued before the inevitable decline. The assumption that China has the momentum to ensure regional dominance without contest is simply incorrect. The elements that constitute China’s national capabilities are not of a quality that make its dominance a foregone conclusion. China is an over prepared but improbable superpower. India is an under prepared but definite regional power. Firstly China’s growth rests on cheap labour as the most abundant resource. That demographic dividend is over. China’s population is ageing. It will be old before it is prosperous in ‘per capita terms’. In 1979 China had 7 working people for every 1 retiree. That changed to 5.5 working people to 1 retiree in 2015. It will become 2 working people to 1 retirees by 2035. However, India and USA’s working population will continue to grow till 2050 So, China’s labour factor of productivity is diminishing. In any case, the advanced robotics that has been commercialized in Japan, European Union and the US has obviated the need for unskilled, semi-skilled labour to a great extant. Capital inflow is also under constraint. Early industrialization in China was driven via small scale enterprises. Then 1990s onwards, ‘Made in China’ transition took over.The gold coast policy exploded export intensive manufacturing. This wasn’t new. Japan, South Korea and Taiwan had done the same earlier but China had more capital and labour. However, China’s growth is not efficient in terms of productivity. It is a state enterprise dominated economy. In its second phase of growth in 2000 – 2015, China grew 6-8% each year depending on how you do the computation but the growth was not driven bylabour or productivity. It was on account of growth in investment /fixed assets thanks to infrastructural surge. From 2008 – after the global financial crisis – the West began a gradual decline in China centered manufacturing because demand itself began to gradually decline. Corporate level of debt as a percentage of GDP doubled in China. China’s government ordered state owned banks to lend to state-owned companies. This was clearly not organic economic demand. It was the largest national building program in world history. Perhaps also the most wasteful one. What happened in Europe in 400 years happened in China in 40 years. Manufacturing moved 400 million people from rural poverty to urbanized mass middle standards.That’s suggestive of a possible high tide of bad debt. Japan also had this boom and then went to 25 years of near zero growth. China’s capital output ratio is about 50 times worse than India’s. This is a remarkable fact. But it is very poorly publicized because India gets much smaller investments due to infrastructural challenges. India is superior in the efficient use of capital.Another area where India has enormous headroom is agriculture. Our yield per hectare is much lower and if we match China’s level of yield we will have some 600 million tons of food grain more to store. This will also explode Indian economy because 65% of our workforce is rural and dependent on Agriculture. Lastly India is a private economy when compared to China where 150,000 state owned enterprises get nearly 80% of all finance and the 6 million private companies survive on the rest. The top 3 state enterprises in China ,in 2015, had revenues exceeding the combined revenue of  the top 500 private companies. It has become even more skewed with the general economic slowdown.This is where the Chinese Communist Party derives its strength. It has commercial empire which gives it ability to extend patronage and control every part of the economy. China has no rule of law, intellectual protection or democracy. India, which does, is more prepared for the future in the real world. Finally, let’s look at soft power. This term was coined by Joseph S Nye Jr.in 1990. But India’s and China’s civilizations have engaged in soft power for the last 5000 years. China has been an insular country. India was colonized and from the year 1100 AD, the country was in turmoil because of invasions including widespread cultural destruction. Despite this, India is ahead of China in art, culture and public sentiment when it comes to recognition across the world community. China is getting soft power from projecting strength economically in Africa and Latin America. Whereas in Asia, it has issues with all neighbours – Vietnam, Taiwan, Japan, India, Philippines. This is not true for India. We have bilateral and multilateral friendships. When ZuiXieobowon the Nobel Prize in 2010, he was the first Chinese citizen to be awarded a Nobel prize while still a resident in China. He was not released from prison, nor was he allowed to accept the award in Oslo. This shows the system currently in power in China. China has internal weaknesses, external strength projection. India and China can be the story of the tortoise and the hare. Keep walking India… http://www.businessworld.in/article/Why-India-Can-Be-The-Preeminent-Power-In-Asia/07-07-2020-294974/

The Internet changed marketing from a military parade to a dance floor! Occasionally the business context changes so dramatically that the laws of business need not to be reframed. This happens when there is a massive shift in either a dominant communication medium or a dominant technology. It happened with mass printing, radio, television and now the internet. Likewise it happened with the commencement of agriculture, the arrival of the steam engine, production while the assembly line and now information technology. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] But, for the first time, the Internet represents both a new dominant technology as well as a means for communication. Hence, this is by far the biggest disruption to business equilibrium. Access and enablement are the universal outcomes of the Internet era of marketing. Besides state actors, it is still only corporations, media agencies and tech majors who’ve had access to data and resulting insights. Imagine when the ecosystem has ready access to “all data’. It has the potential to make marketing more relevant than ever before or totally irrelevant depending on how marketers respond to this change. Prior to the arrival of the internet, marketing was often defined in terms of war. It even used military terminology e.g – target, flank manoeuvre , frontal assault, strengths , weaknesses ,campaign, gain– loss, attack-defend , territory, advantage, tactics etc. Brands ran advertising campaigns aimed at whole populations sending strong thematic messages. It built strong brand associations ,generation after generation, and gave people a sense of relationship even if they were not buyers or consumers of the given product or service. With the arrival of the Internet the ‘one-to-many’ motive for any pre-eminent medium was lost forever. The most significant difference between new media and traditional media operators was the wealth of data available with the former. The damage that ‘data – ism’ has done is to diminish the role and relevance of creativity is a subject of deep study. It has also given short-term outcomes more prominence and established this modality in the name of ‘effectiveness’! Targeting, retargeting, search and social media – many of these have compromised longer term brand fame. Everyone is relying on last-minute targeting. This neglects renown, prominence or talkability and flattens the transformational effects of great creativity. The metrics and horizons for brand building cannot be the same as those for the quarter, half year or fiscal year of business reporting. Emotional priming, gaining fame and earning and owning of memory structures needs time. However, we are seeing that the immediate and short-term considerations are of supreme importance. Tactical marketers pander to the ‘short-termist’ majority. They celebrate a lot of jargon and flashy bits of ephemeral advertising. The very first public stage exposure for this new age was only as recently as 2011 when McKinsey & Company Circulated a report called ‘Big data: the next frontier for innovation, competition and productivity’ . Soon after this IBM, SAP, Oracle, Microsoft and several others began to claim expertise, products and solutions to make big data a commercial reality. There were authoritative articles written about how the CMO was becoming a bigger driver of digital adoption and tech adoption  than even the CIO. For digital centricity, C-suite collaboration critical—from the CEO who presents a unifying vision, the CMO who owns the customer relationship, the CIO, who enables data analytics, the CFO who weighs financial priorities, to the Chief Human Resources Officer, who identifies a talent strategy. Applied thoughtfully, digital technologies can better connect organizations to their customers, partners, and employees. But tech-enabled interactions must not lack a human touch or connection. Brand building needs a leveraging of technology in ways that enrich, rather than dampen, the human spirit. Likewise, brands are moving from being isolated entities to being members of far-reaching ecosystems that can address customer needs more holistically. With technology, brands can expand to new business areas by looking beyond industry boundaries to address customer needs, identify opportunities for growth and partnerships, and create new value for customers. Businesses that solve unmet needs through smart, open ecosystems can displace competitors that are unwilling or unable to do the same. Only very few organizations have the opportunity to involve consumers and communities in shaping, influencing, building, and co-creating brands. Many marketers feel the need to evolve and create dynamic, two-way engagement across all stages of the consumer journey and the product life cycle. Hence customization, community building, or crowdsourcing can turn willing customers into brand ambassadors, influencers, advocates, collaborators, and even innovators. I have had the privilege to do that at Royal Enfield building one of the largest and most engaged social media communities in India besides the huge presence of the same riders on ground. In an era of connected technology and big data analytics, customers and regulators are increasingly conscious of trust and its sanctity. This may require companies to create a structure that protects customer data and privacy, detects threats to data protections and security, and promotes the ethical use of AI. The breakneck pace of technological change is not slowing. Companies that embrace change and place the customer at the center of their organizations can make choices that have a win-win impact or they can wait to perish. Today’s business leaders know that digital technologies hold the potential to transform nearly every aspect of our world. Organizations are exploring advanced analytics, AI, cloud computing, and the internet of things. But they are also learning that these technologies aren’t a substitute for the bonds we share as humans. http://www.businessworld.in/…/The-Internet-Changed-Marketing…-/18-06-2020- 288747

Disruption, chaos and complexity are amongst the most important subjects of study in the modern era. They are profoundly important multifaceted concepts. However, they are very less understood. Einstein’s ‘Theory of Relativity’ shredded the concept of absolute time and space. Quantum physics took us beyond controllable measurement processes. Studying chaos shows us a world beyond deterministic predictability. Chaos has beautiful and intricate patterns. Irregular order can seem like chaos. We have to identify and understand non-linear patterns. The world is dealing with a pandemic and cannot make sense of it because our capacity to model non-linear systems is poor. Be it the weather, the economy, traffic, a set of random numbers, landslides, shape of natural objects, stars in the sky, or a series of stock prices, chaos is about pattern and probability. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] The brilliant French mathematician Henri Poincaré(1854-1912) is,in some ways, the father of chaos theory. His central insight is that of the ‘sensitive dependence on initial conditions’. Many physical systems exhibit sensitive dependence on arbitrary initial conditions, and are therefore essentially unpredictable. The classic example is the weather.In 1972 Edward Lorenz, of the Massachusetts Institute of Technology, wrote a paper – ‘Predictability: does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”The paper did not provide the answer. That was the point it wanted to make. It showed that weather occurrences obeyed certain mathematical rules, but never repeated themselves within any finite period of analysis. Even tiny changes in a couple of variables, extrapolated over a month or beyond, could produce dramatically different results.The weather makes itself up as it goes along. Complex systems like the weather, economies, astral phenomenon,animal kingdom, our brain’s impulses and the internet are not stable.Our reflex, when confronted with non-linear systems, is to attempt to solve them by substituting linear approximations. Regularities that get detected in this way are totally counterintuitive. In the 1970s, Benoit Mandelbrot, a mathematician working in IBM’s pure research department analyzed cotton price data with massive computing power. He showed that there was unexpected order within the disorder. He coined the very useful word ‘fractal’ to describe things that are very similar to each other, yet not identical. Things like cotton prices, rainfall, earthquakes or vegetation. Patterns are endlessly repeated but ininterminable and unpredictable variety of ways !Business is fractal: no situation is quite like another, but there is a limited set of key factors that always resemble each other. Business outcomes are utterly unpredictable. A proven science of management giving universal laws may never be possible. Just like we may never learn the best way to prevent, or manage pandemics even though the patterns seem to be familiar. The useful lessons for life, brands and business may be spelled out as : 1. Look for pattern or order in apparently random or disordered data. Patterns exist. The only question is whether we can detect them. All markets generate patterns of behaviour and response. 2 Linear analysis is not the way of finding the hidden order if the system is reasonably complex and interdependent. The human brain has the flexibility and imagination to discover the pattern. 3.Simple systems do complicated things. Conversely, complex systems can give rise to simple behaviour A few key things when combined with chance can lead to incredibly varied outcomes. Try to isolate the key variables, the main causes that interact with each other. Look for characteristic and reliable patterns of simple behaviour 5.Chance or luck has an impact on our lives and this world. Just because cannot be modelled doesn’t mean it doesn’t exist. We have to always expect unexpected things and also factor in the unknown. Lastly, we should build flexibility into our plan by changing the things that we can control. It also brings up the need to have alternatives, contingencies and multiple strategies. There is a Farsi verse in a couplet by a famous Sufi that says ‘Eenturfatamaasha been daryabahubaabandar’ – ‘Behold the spectatcle, an ocean is inside a bubble’ Life, is in many ways a bubble in a churning ocean. Live it. http://www.businessworld.in/…/An-Ocean-Inside…Bubble…/20-05-2020-192658