The Indian mathematician Ramanujan used to have discourses on interpretations of God, Zero and Infinity with his friends. To Ramanujan, the idea of God or spirituality, came from his Brahminical antecedents and I am assuming since he was a passionate mathematician he connected that with Zero and Infinity. He once said, “An equation has no meaning to me unless it expresses a thought of God”. In his life, he was trying to comprehend the infinite reality around him and pointed out that existence of a human life is nothing but a zero. Ramanujan’s philosophical thought was that every being is a product of zero and infinity and is a finite number; the interpretation was difficult to comprehend for many even when Ramanujan was alive and it still today is for many.
I am here presenting my interpretation of God, Zero and Infinity; and later will connect it to creating unimaginable possibilities in business in modern day. In Indian philosophy when a spirit attains Nirvana, the attribute it acquires is that it can then observe all the knowledge of the universe pertaining to the past, present and future of each particle, all at once in one single moment. The spirit after attaining Nirvana will keep doing this forever and remain in the bliss of knowledge, away from the sufferings which happiness and sorrow brings. Feeling happiness and sorrow are the deviations of a spirit whose true character is only of knowing and remaining equanimous to the knowledge. When the spirit has attained Nirvana it transforms the possibility of knowing the infinite world into reality, in fact the soul itself becomes infinite knowledge. And to achieve Nirvana the soul looks inward and shreds off all the worldly bonds and unshackles itself from the accumulated Karmas. The soul identifies itself in the original and pure form i.e. the state of zero bonds. The process of Nirvana takes a soul as close as possible to the God or of being God itself. Now, if I attempt to describe the above paragraph in one sentence it would be as following; the soul, in the process of coming closest to the God, identifies its pure form of zero worldly bonds and innovates itself into infinite knowledge. It can also be interpreted as following, that to create infinite, first you have to identify the zero. It can also be interpreted as simplicity and focus facilitate reinvention, while complexity and disruption are the ingredients for slow death.
A business starts and then fails is understandable, but many analysts scratch their heads when a business starts, succeeds and then fails. Wisdom tells that most of those business who deviated from their core strengths or differentiators, which were the reasons of their initial success, lost their way in the desire of creating new markets, consumers and products/services. Chris Zook and James Allen of Bain & Company, Inc in their book ‘Repeatability’ talk about Repeatable Models in businesses which are built on core differentiators of the companies. One of the examples they give is of Nike whose business model is based on four core capabilities:
- Brand Management(the swoosh)
- Athlete partnerships
- Award-Winning Design and use of new materials
- Efficient supply chain to Asia
Companies like Nike succeeded because they didn’t forget their core and repeated them in whatever they expanded with constant improvement.
Let me now draw a parallel between my above explained interpretation of God, Zero and Infinity with the process of creating long-term profitable business models. Mature or young organizations need to take a step back to look inwards or go back into their history and zero in to their core differentiators. Once the organizations identify the core differentiators they can then implement the core values along various vectors such as New Product/Service, New Market, New Business Model, New Geographies and so on to create infinite possibilities. If the realization of core differentiators was an equivalent of zero, their applicability across different vectors to expand business is equivalent of infinity. The business thus creates infinite possibilities of innovation which have higher chances of success since they emerge out of the strong platform of core differentiators. The organization that repetitively implements the core differentiators with constant improvement along different vectors, achieves the state of long term profitability and growth, driven by core differentiators. This state is the equivalent to Godliness in business. There is one big difference though once the spirit attains nirvana or godliness it is irreversible on the other hand, Godliness in business is not permanent!
It is impossible to turn an organization a truly innovative organization unless the most important constituent that is the people of the organization become innovative. To me the idea of empowering the individual in the organization fascinates far more than the idea of creating a special group of people and solely holding them responsible for bringing innovations in the organization. Innovation is a necessity and would not come in totality unless every part of the organization innovates in every activity that it executes or plans. One, who is present everywhere, every time is the individual who collectively helps the organization achieve the above goal. The special group created and solely held responsible for innovation cannot be everywhere, every time. However, this special group is necessary for providing the long and short term direction to the innovation initiatives of the organization. Therefore, along with the creation of special group it is also imperative that the organization empowers the individuals who are working across the departments, functions and geographies.
Any individual requires two sets of skills to execute the specific job given to him under the realm of an organization. First, she needs the ability to understand and deliver the goods in the particular function for e.g. sales, operations, HR etc. This ability is his or her ability to think about the given function, better than other can do. The ability would come from her unique personality traits and her unique way of looking at the function which differentiates her from people who excel in other functions for e.g. Ability to sell. ‘Ability’ brings the originality in thinking and the way a perspective is built by an individual. The second set of skills is the knowledge of process to execute responsibilities in the given function. Most of the companies follow the standard process adopted universally and therefore there is nothing unique about this skill set for e.g. process of selling. ‘Process’ brings standardization and repetition with an objective of increasing the productivity. So, ‘process’ and ‘ability’ are the two differentiated skill sets an organization should see in a prospect hire.
Over the years due to shareholders’ and various other market pressure ‘process’ has taken over the ‘ability’ in the organization’s screening method. The pressure on the process lead system of the organization forces a new hire to start delivering from the day one and therefore, it becomes imperative for the new hire to know process comprehensively. Hence unintentionally, process has become more important skill set than ability and standardization has taken over the originality.
This trend of originality taking the back seat is the single biggest impediment in becoming of an innovative organization. Process led work environment has made the organizations introvert, defined, framework led, jargonized, day to day oriented and therefore they lack the critical skill-set of ‘ability’ to innovate. This self inflicted trend by the organizations across the world, has made them ‘the performance engines’ as aptly termed by Vijay Govindrajan. Therefore, organizations need to redesign hiring plans and screening methods and induct people who are stronger on ‘ability’ as well. ‘Ability’ not only brings originality in the business but it also improves the ‘process’. It not only positively impacts long term, but also the short term of the business. The right combination of ability and process in an individual helps the organization to keep the core intact while bringing about the necessary changes to cope up with the external dynamism of the markets.
Bringing about change at the individual level in the organization is the single most important issue in front of the companies during process of becoming innovative. To put it simply organizations will have to think in this way that “The ability to sell is more important than the know-how of the process of selling”. Until this is dealt with sincerely and ability is not given importance above process, other measures taken to make an organization innovative will not work the way business envisions.
As argued in the last blog, The Multiplier Effect, regional focus in strategy will help business in India to unlock the real wealth in the fragmented marketplace. The dream of creating one brand/variant for all geographies in India is close to death and therefore companies will require new lens to analyze the geographical diversities and create products and services according to the capacity of the market. As discussed in “The Multiplier Effect” different types of brands capture market share in various Indian states. In some states the ‘premiumness’ of the brand attracts while in other states it questions the affordability of the consumer. Therefore, it is time to design state specific products and in turn brand strategy and put into execution even if it requires drastic organizational restructuring. The sooner any brand does it, has the advantage of taking lead in terms of market share and more importantly acquire the learning of hiring local talent and creating local channels. For e.g. Balaji Namkeens in Gujarat has built a very strong distribution channel for its traditional snack business, which is almost impenetrable and taken as a standard to achieve by many national companies.
One of the ways, in my view, companies can plan differently for various Indian states is by analyzing the regional consumer basis per capita SDP(State Domestic Product, broadly similar GDP at national level) and Income of the specific states which would be fair indicators of consumer choices and affordability. This economic basis of figuring out the inter-state variation will be in addition to the convolution of umpteen numbers of other regional factors. So, the states can be segmented into three zones of High, Medium and Low per capita GDP/Income. National average of per capita GDP of India is $ 1,228 and per capita income is Rs. 60, 972. States like Goa, Maharashtra, Tamil Nadu, Gujarat who have per capita GDP and income well above the national average would fall under the Zone 1 states. States like West Bengal, Karnataka, Punjab, Uttarakhand, Himachal Pradesh, Arunachal Pradesh whose per capita GDP and income hover around the national average would fall under the Zone 2 category and finally, states like Jharkhand, Rajasthan, Madhya Pradesh where the figures are well below the national average would constitute Zone 3 states. Many brands witness good business in Zone 1, while struggling in the Zone 3 and vice-versa, clearly affirming the fact that consumer needs, affordability and value propositions are different in each zone. The answer to this fragmented market and anomaly in brand performances across various states is to create different product strategies for each state or for cluster of states falling in similar zones whichever way works better overall in terms of initial implementations. Off course, the other regional differentiating factors will also have be brought in while designing the products for various states.
Apart from economic disparity the 3 zones would differ in their infrastructural facilities, historical background of development of the state, SDP rate of growth and business environment in general as well thus, impacting various other vital business factors such as distribution, type of local competition etc. These vital business factors along with the consumer economic and cultural background would be key factors in designing the business structure and model for various states or zones as classified earlier. Some brands in consumer goods business have started to bring out regional variations of their national brands but that’s not enough. That’s not enough to do justice to the potential of the Indian market. The need is to develop and deliver fundamentally regional products/services and that cannot happen successfully unless the business structure is designed to complement them in terms sales and other support systems. The time now therefore, has come that the brands analyze, strategize and take bigger leaps of designing business for various states with high focus on regionalism of the consumer.
Apart from Per Capita SDP/Income, there can be various other ways and methods of probing into and discovering the geographical diversity of Indian consumer in the interest of market and business. Rajiv Shukla in his article in Economic Times proposes a method for analyzing the regional consumer and that is through her spending intensity for the given category. Rajiv took the case of beverage and processed food category and argued that while Maharashtra was biggest in terms of market size, Uttranchal was highest in terms of consumer spending intensity in that category. Rajiv argues that spending intensity, which means how much a household spends on a category, should go as an input to create products for different kinds of market; higher the spending capacity in a particular state higher is the chance of consumer adoption for premium products in that category. Rajiv also says that there is need for understanding better the geographical diversity of Indian consumer economy in terms of their purchasing power, spending intensities, tastes, lifestyles, aspirations, cultural content and many more.
Similarly, in one of the papers, written by McKinsey Global Institute, ‘Urban world: Cities and the rise of the consuming class’, proposes to divide Indian business geography into 12 distinct clusters to achieve granular strategic planning. Most of these clusters fall within one state. McKinsey has identified these clusters (which are spread across various states) centered around 14 rising cities and closely connected towns. By doing this companies can improve consumer segmenting based on varying consumer attitudes, tailor marketing and branding to cluster specific characteristics. By focusing and creating strategies for clusters companies can reach to 55% of the nations’ entire urban population on the other hand if a company were to base strategy on India’s 14largest cities, it would get access to only 20% of the country’s GDP. The key takeaway from McKinsey paper is the glaring requirement of regional focus to detonate growth for the companies operating in India.
There is a need of shift in strategies of consumer goods companies in order to grab the bigger pie of the “Emerging Indian Opportunity” and acquire a consistent market share across the geographies in India. Secondly, the challenge from traditional and upcoming regional players is collectively going to become stronger and therefore is a threat for market expansion plans of the national brands. If the brands are not going to find ways to regionalize today they are risking their positions and might repent tomorrow. As explained above companies can take different paths of analyzing the regional consumer but cannot anymore delay the analysis. Post analysis companies would require creating integrated innovation and business strategy to design a business which will survive and sustain against the regional challenges of geographically diverse India. This complete cycle of analyzing, strategizing and designing business will require long term and short term innovation initiatives and organizations should gear up to embrace them sooner rather than later. Innovation to regionalize is a strategic way to grow business in the high population, high growth and diverse economy like India.