Do you recall small brands?

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Do you recall small brands?

Fevicol did it and how. Its advertising established it as a a household name and a generic for the category and won the agency O&M tonnes of awards. Other brands in low involvement categories like plywood, pens, glass are now following suit. So, why are agencies and advertisers getting so involved with these brands?

Plywood – now how many people are really excited about this product category? Chances are that very few don’t even know that there are atleast a 100 brands in the market. A majority of these brands don’t invest in any form of advertising. But market leaders Greenply and Century Ply want consumers to remember just their brand names. And they are doing this by creating some simple yet eye- catching advertising. Advertising that is winning awards like the Greenply film that won an Abby Gold early this year or the Century Ply ad which is getting talked about within days of its launch. This film took a year from conception to execution and finally hit television channels only in December. The brief given to the agency was just to create an interesting ad with a single-minded proposition!
Deputy MD, Century Ply, Sanjay Agarwal , “There have been certain failures as far as certain creatives are concerned in the past. But this time, it has to be good. We are trying to reach the masses. Plywood maybe low interest category but when you make your house, you are spending 15% of your expenditure on plywood.”

“This is a lot of money and if the name Century Ply is in your mind and if we can convert even 3%-4% of people from other brands – that’s a big development for me. It’s a Rs 10,000 crore market and a small shift for us. Another reason is we are into plywood but diversifying into cement and the agri business, and for that we have to create a brand and Century Ply is the brand that will go to the masses.”

It’s every brand’s attempt to reach out to the masses, even if they are not going to directly buy your product. Brands that have very low consumer involvment tend to make the mistake of focusing on what they think is their USP. The trick actually according to other brands like Camlin is, to forget about product applications and focus on creating a high involvment emotional product that will eventually deliver sales.

Executive Director, Camlin, Shriram Dandekar says, “Any soft sell ad will never give you direct information on the number of units sold or the number of units picked up but we believe that over a period of time in a continuity, when people see this ad, it will have good recall value – the theme will have a record and will leave an impression that Camlin has created a good ad and that means Camlin has a good product.”

Group Creative Director, Lowe, Preeti Nair explains, “Unlike a detergent or a soap, your involvment is very clear, these are the categories you don’t care what you are buying, therefore what name remains salient is what you will ask for. Saliency will happen only if you are memorable. A brand gets registered – it’s not because of how often the brand name comes, it’s at what time it comes, so if you take a single-minded benefit and do a commercial they’ll remember, you’ll get saliency on the brands. Brands like Fevicol, Greenply have done it.”

Such advertising has a definate advantage in terms of longer shelf life over advertising campaigns in the FMCG space. For most such brands, there is greater emphasis on the creative idea rather than the media plans. Most of these brands don’t spend more than Rs 3 crore annually on advertising, but definitely get a lot more bang for their buck!

Mentoring The Mentors

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Mentoring The Mentors

Recent research by geneticists in the University of Chicago has thrown up the surprising finding that the human brain was evolving as recently as 5,800 years ago. This was well after the rise of the modern man 200,000 years ago. More importantly, the finding points out that our brains may still be evolving.

A lot of it is linked to the way our lives have changed fundamentally in the intervening millennia. When art, music and tool-making were emerging 37,000 years ago, our brains responded significantly to this change. The development of written language, the spread of agriculture and development of cities kicked in another important change-and another phase of evolution of the human brain.

With changes in patterns of everyday existence, our brains too evolved to accommodate these complexities. The evolution of our brains has also transformed the way humans deal with one another and develop a new set of leadership skills in each era of history.
In the case of the brain, luckily for us, the change occurs on its own. But for leaders, the onus of change is thrust on them. So, in a fast-changing corporate world, a manager must change and evolve his leadership style moves up in the hierarchy.

Mentoring, at its core, is about helping your people with advice on leading and managing in a new role. If they were not mentored at the time they moved to this role, they need it even more. They might have inadvertently picked up habits that could be holding them back from being more effective.

Have you moved to a new role recently? First, my congratulations! Now, to help you judge how well your style has evolved, here are two questions you can ask yourself:-

How many new habits have I adopted in response to the requirements of this role?

How many habits and activities have I discarded as not being relevant anymore?

Mentoring involves, first, helping leaders answer these two questions and, second, helping them through the much longer process of learning new habits and un-learning old ones.

Because management is a practice, it cannot really be taught in the classroom. At best the classroom can help us know the “What” and the “Why”. But what really matters is “How”. How to learn new habits, while also un-learning?

Also, the “How” would differ in each case-the differences being defined by the mentor and the mentee, their respective styles and temperament, the organisational culture, and the needs of the organisation.

The extremely outgoing leader will naturally have a way of mentoring that is different from another who prefers a more toned down style. Similarly, the way this leader with an outgoing personality is mentored will differ from the one who prefers a less flamboyant approach.
Cultural factors too play an important role. This was recently driven home to me quite forcefully while working with an executive team comprising members from Western Europe, South-East Asia and India. Their styles were influenced quite strongly by their respective cultural backgrounds. But more importantly, there were many common areas too. We used these commonalities in our mentoring programme to develop the foundation for achieving higher team performance.

An Acquired Skill

Though mentoring is an acquired skill (learnt only by doing), what is usually not mentioned is the fact that it involves a fairly steep learning curve. Rather than learn while naturally making mistakes, we prefer to a it as managers and leaders. But the more we make mistakes, the better we become.

Also, to clarify, mentoring is not the same as offering suggestions. At best, suggestions-for example, “always do this while talking to a vendor”, or, “never do this in a client meeting”-qualify as suggestions.

It takes time, persistent and conscious effort to become an effective mentor. But it becomes far easier to learn, while making fewer mistakes, by watching others do it first. By having role models.

“GE’s training works because of a thousand different things, most of which have nothing to do with training”, declares GE’s Chief Learning Officer Rober Corcoran. He adds that 20 per cent of leadership development is a result of mentoring, coaching and role models.
[To know more about the other 80%, see The Leadership Factory (Part I) and The Leadership Factory (Part II) ]

Leadership, and by extension, mentoring, are learnt best by a process of apprenticeship, where we first observe someone doing it, before attempting it ourselves. Carl Bass, COO of Autodesk the US $1.5 billion software company, is candid. “As an executive, you’re always being watched by employees,” he says, “and everything you say gets magnified-so you teach a lot by how you conduct yourself.”

Mentoring, often, is “taught” to the leaders in the middle-rung of the organisations first. But what gets in the way of their becoming effective mentors is the fact that they don’t have any role models to observe and learn from. A few try and muddle through. The majority simply follow the path of least resistance, and leave the learning behind in the classroom or their notepads.

On the other hand, if these skills are first learnt at the top, the senior executives then act as the role models. They then disseminate these skills to the next level of leaders. In effect, mentoring skills flow down the organisation chart. Mentoring, like leadership development, exhibits a trickle-down effect-what gets to the bottom depends on the quantity poured at the top.

It goes without saying that not all that trickles down will ever reach the base. So, the more I pour, the more reaches the last level. In any mentoring programme, mentoring the mentors is the important activity. Everything else follows naturally. And leadership styles throughout the organisation evolve much easily, like our brain does.

American leaders studying the Gita

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American leaders studying the Gita

The concept of the crucible and the spark that sets off the alchemy was lucidly explained by a young man who had set his heart on conquering India. Alexander the Great, when 16 years old, told his secretary, Eumenes, “The gods put dreams in the hearts of men; dreams that are often much bigger than they are. The greatness of a man lies in that painful discrepancy between the goal he sets himself and the strength that nature granted him when he came into the world.”

This simple and profound statement points to three eternal truths about the essence of leaders. A leader has a passionately desired goal in his or her mind. A leader has the honesty and courage to admit a personal incapacity to reach that goal. Nevertheless, he strives to improve himself to obtain the goal and thus emerges as the leader we recognise.

Gandhi and Alexander, bot h great leaders , were very different persons: one a man of peace, the other a hero of war. Gandhi was a small man with a big dream. Like Alexander, he also had a goal he pursued relentlessly — though unlike Alexander’s his goal was to throw off a conqueror of India. His autobiography My Experiments with Truth recounts his lifelong efforts to find a better way to reach his goal and acquire the personal strength necessary.

We need more leaders in India in many walks of life. Our young people need appropriate role models, not all of whom may be powerful or wealthy. Moreover, any movement to develop leaders in India should hark back to some eternal truths. To become leaders, young people need opportunities to reflect deeply on the context in which they must lead and to ignite the spark within themselves. Because, to become leaders, they need much more than the style of leaders: they must care for others, have commitment to a cause, and the courage to take the first, difficult steps — the wisdom that Krishna gave to Arjun.
The skills leaders need are inseparable from the context in which they must lead. Sun Tzu will remain a good source of wisdom to win a war. But the Gita may provide better lessons for living in harmony with the world and with one’s conscience too. Therefore, in the drive to teach leadership through books and seminars, we must offer models that fit the needs of our times.

CEOs that create great wealth for their shareholders are good models for running a company. But they may not be appropriate models for many vital issues that must be addressed in the world today. Disillusioned by a spate of corporate scandals and by the macho but mindless invasion of Iraq, Americans need new role models. In India too we need leaders who win by inclusion and who secure peace and not merely win wars.

Therefore, the interest in the Gita in the US is encouraging, as well as the revival of Gandhi as a role model for Indian youth in a very enjoyable Bollywood movie, an idiom they can relate to more easily than erudite discussions of his philosophy.

MANY leadership summits that showcase powerful and wealthy leaders and popular books on leadership fail to get to the heart of leadership. Books that present lists of the common traits of leaders expect that others will become leaders by applying these lists in their lives. Such lists may describe the management systems that leaders employ to get to their goals, but not the process of combustion within: they do not explain what makes leaders emerge.

In contrast to such lists, Warren Bennis , an authority on leadership, describes the process of emergence of leaders in his book, Geeks and Geezers. He says that while leaders may come in many forms and have very different trai ts; all leaders are born in a ‘crucible’ within which, through an intense alchemy, they acquire their leadership mettle.
The concept of the crucible and the spark that sets off the alchemy was lucidly explained by a young man who had set his heart on conquering India. Alexander the Great, when 16 years old, told his secretary, Eumenes, “The gods put dreams in the hearts of men; dreams that are often much bigger than they are. The greatness of a man lies in that painful discrepancy between the goal he sets himself and the strength that nature granted him when he came into the world.”

This simple and profound statement points to three eternal truths about the essence of leaders. A leader has a passionately desired goal in his or her mind. A leader has the honesty and courage to admit a personal incapacity to reach that goal. Nevertheless, he strives to improve himself to obtain the goal and thus emerges as the leader we recognise.

Gandhi and Alexander, both great leaders , were very different persons: one a man of peace, the other a hero of war. Gandhi was a small man with a big dream. Like Alexander, he also had a goal he pursued relentlessly — though unlike Alexander’s his goal was to throw off a conqueror of India. His autobiography My Experiments with Truth recounts his lifelong efforts to find a better way to reach his goal and acquire the personal strength necessary.

We need more leaders in India in many walks of life. Our young people need appropriate role models, not all of whom may be powerful or wealthy. Moreover, any movement to develop leaders in India should hark back to some eternal truths. To become leaders, young people need opportunities to reflect deeply on the context in which they must lead and to ignite the spark within themselves. Because, to become leaders, they need much more than the style of leaders: they must care for others, have commitment to a cause, and the courage to take the first, difficult steps — the wisdom that Krishna gave to Arjun.

Keep your goals in sight

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Keep your goals in sight

It was early in the morning and Guru Dronacharya had decided to test his students and look for the best archer. All the 105 students from the royal family of the Kauravas (which included the 100 sons of the blind king Dhritarashtra and 5 sons of Pandu, known as the Pandavas) were being tested on each subject that they were being taught. Today the subject was archery. The master had hung an artificial bird from the branch of a tree and before handing over the bow to the young aspirant, the Acharya would ask – my child what do you see?

Sir, I see the sky….
Go my child, it’s not yet time to hand you the bow and arrows.

This process went on, till in the end it was Arjuna’s chance. Asked what he could see, he said: “only the eye”.
Yes! The ma ster felt, the worthy aspirant has the goal set before him and should be given the instrument of attaining the goal.

It is often debated whether these events occurred or whether these were mere mental creations of a person like Vyaasa. If these events never took place, the greatness of Vyaasa lies in the fact that he could compose something which has it’s relevance till today.

A great teacher that he was, with this story, Vyaasa probably tried to emphasise upon the fact that a person with tools and without a goal or mission, is like a monkey with a razor in his hands. It is the vision and the goal that makes a person the way he or she is.

One of the famous sayings of Dr. Abdul Kalam is – dream, dream, dream… for dreams convert into thoughts and thoughts into actions.

In a way, in order to transform our inner beings, probably one of the best and most effective means is to have positive dreams. That is one of the effective ways to human resource management. Most of us do not realise that it is the scope of professional growth and emotional security that lures a man to any corporate group rather than what he or she manages to earn now. In a way if an employee is given a direction and a vision to grow, the process makes the individual grow with the institution.

Interestingly, it has been seen that most people, even if they dream big or have visions, cannot sustain them. Probably that is where the role of leadership comes in. A true leader is one who gives the scope for a team colleague to grow on one’s own, while the leader helps in sustaining the dreams of the person.

When a person can sustain his own vision without any external support, he is an exception. If we can be ruthlessly disciplined to do that, we will be able to keep our machine ticking even when the going is really tough. That is probably the key to success. And that is what takes me ahead of many other fellow beings who also aspire to reach the pinnacle.

One such real life story I came across and could drive home the picture I want to portray – can even become a continuing source of inspiration. Can we bring about this transformation in ourselves and make the world a better place to live in?
When she looked ahead, Florence Chadwick saw nothing but a solid wall of fog. Her body was numb. She had been swimming for nearly sixteen hours.

Already she was the first woman to swim the English Channel in both directions. Now, at age 34, her goal was to become the first woman to swim from Catalina Island to the California coast.

On that Fourth of July morning in 1952, the sea was like an ice bath and the fog was so dense she could hardly see her support boats. Sharks cruised toward her lone figure, only to be driven away by rifle shots. Against the frigid grip of the sea, she struggled on – hour after hour – while millions watched on national television.

Alongside Florence in one of the boats, her mother and her trainer offered encouragement. They told her it wasn’t much farther. But all she could see was fog. They urged her not to quit. She never had . . . until then. With only a half mile to go, she asked to be pulled out.

Still thawing her chilled body several hours later, she told a reporter, “Look, I’m not excusing myself, but if I could have seen land I might have made it.” It was not fatigue or even the cold water that defeated her. It was the fog. She was unable to see her goal.

Two months later, she tried again. This time, despite the same dense fog, she swam with her faith intact and her goal clearly pictured in her mind. She knew that somewhere behind that fog was land and this time she made it! Florence Chadwick became the first woman to swim the Catalina Channel, eclipsing the men’s record by two hours!

The last days of an IIM professor

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The last days of an IIM professor

Ajit Balakrishnan – 10 November 10, 2006

In that darkened room in Hyderabad, I could see that the muscular arms that once smashed a table-tennis ball at blinding speed were now skeletal. The full head of hair had now only a few strands from repeated bouts of chemotherapy. Even a slight movement on the bed made him grimace with pain.

A flurry of email among the Indian Institute of Management alumni had brought me to Hyderabad that morning. “Professor Iyer is dying with cancer,” announced one mail. “They say there is an experimental drug that could help; he has ordered it from the US but he has no money to clear it when it arrives next week.”

Ramu Iyer taught computer science at IIM Calcutta in 1969, a year when Bill Gates was eleven years old and a decade before Intel and Microsoft, the defining companies of the modern information technology era, were founded. Many of his students are multi-millionaires, board members and CEOs of world-scale companies.

“Does it pain much,” I asked and immediately felt stupid; of course it did, I could see the pain in his face. “How is your business,” he asked, pointedly ignoring my question.
We talked for the next few hours about what was going on in the technology world, his mind eager to keep up-to-date, mine trying to find an opening in the conversation when I could ask the question that the IIM alumni had deputed me to ask — could we help out with the money needed for his drug?

To ask a professor at whose knee you learned everything that you know whether he needed the money to buy a drug that might save his life is a difficult thing to do. What has failed here, you wonder. The way we have organised Indian society that its teachers live a life of penury while their students prosper? Our health care system with its medical insurance schemes that extend to very few? The callousness of the business world, which, preoccupied with growth and investment, doesn’t ever cast an eye on the fountainheads of their success: schools and colleges and teachers?

In the Indian system, an IIM professor’s salary is fixed through the Pay Commission, that gigantic exercise that happens once in 10 years, when compensation levels of five million central government employees are re-set, and 20 million others at state and municipal levels and government-owned companies and semi-autonomous bodies like the IIMs and the IITs follow using a similar formula.

It works on an apparently egalitarian principle, a 1:11 ratio for lowest-level peon to chief secretary and a system of equivalences: an IIM professor’s post is equated to other posts in fisheries, mines, customs, income tax, defence, All-India Radio, Doordarshan. Either all get a raise or nobody gets one. Except that an IIM professor needs a high-quality PhD and has unlimited job opportunities as every country in the world gears up its management schools.
The fallacy of the Pay Commission system is that it prevents market forces from working in the job market. By keeping the salaries of college professors low by equating them to a dozen different types of civil servants, it slows down talented people from staying on for PhDs and then teaching at colleges, which results in colleges like the IIMs not being able to increase their intake, which leads to artificially inflated salaries for their graduates, which causes resentment in government circles, which leads to more Pay Commission demands. . . and the cycle continues.

What prevents the Pay Commission method of compensation-setting being broken, in spite of many recommendations that it be abolished, is the vast “distributional coalition” (a term coined by the Nobel Prize-winning political economist Mancur Olson) of state sector employees, who are adamant that all of their members be included in the Pay Commission.
A distributional coalition, according to Olson, is overwhelmingly oriented to struggles over the distribution of wealth and income to its members rather than to the production of any additional output. Distributional coalitions also keep societies stagnant by preventing re-allocation of resources. By artificially equating salaries across large swathes of the economy, market forces, which direct people away from low-utility jobs to higher-utility ones, are not allowed to come into play.

The darkening afternoon reminded me that I had to catch a flight back to Bombay. I bade goodbye to my professor knowing that it was probably the last conversation that I’d have with him. His wife escorted me to the door. As we stepped out of range of Ramu’s hearing, she burst into tears: “I don’t know what to do-I am so scared .”

I did not say anything, I merely smiled sympathetically because I too was worried; for Ramu Iyer, what would happen to his wife after his time, and a system where a professor could die for want of an amount that his students get as starting salaries. And the seeming impossibility of dealing with the vast distributional coalitions that keep our country in their grip.

A few of us alumni put up the money for Ramu Iyer’s cancer drug though it did not help and Ramu Iyer died soon after. I would like to imagine that wherever he is now, he has the solace of knowing that at least his students had not forsaken him even if the giant bureaucratic system that he served for so long had no thought for him.

How the LG Group revamped itself

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How the LG Group revamped itself

Although LG had a clear vision of where it wanted to be and had begun to develop realistic action plans for transformation, a key question remained as to how the organization would be able to fuse the favorable attributes of the existing local traditional Korean corporate culture with the necessary characteristics of more cosmopolitan organization. A successful transition could create a unique corporate culture and an enduring source of competitive advantage.

The LG Group developed three growth models to outline the characteristics and requirements in each context. By identifying the skills, strategic approach, growth vehicles and evaluation criteria the group began to deal with the complexity of managing growth across industry dynamics in the context of geographic competition.

Organizational transformation is a tough process for a company with deeply entrenched culture and processes. The LG Group outlined an intensive process to redefine its corporate culture.

The revolution program was appropriately titled Leap 2005. Under this program the group would strive to become the world’s best in both quality and quantity; attain group wide revenue of Won300tn (approximately $400bn); reach highest profit-ability in each industry; establish a brand image renowned for customer satisfaction and create a fulfilling workplace for employees.

Leap 2005 systematically outlined measures the group should take to achieve global leadership. To accomplish these changes under Leap 2005, LG went about redefining its strategy, making difficult portfolio choices, changing its people management systems, outlining core competencies etc.

On January 1, 1995 the group formally changed its name to LG Group from the original name Lucky-GoldStar and embarked on a new corporate identity program. The new ‘face of the future’ logo symbolized the five concepts of world, future, youth, humans and technology, which the group believed were significant elements for growth and development.

models for growth

LG needed to achieve growth under three primary, but different conditions ie South Korean, regional and global context. LG developed three growth models to outline the characteristics and requirements in each context. By identifying the skills, strategic approach, growth vehicles and evaluation criteria the group began to deal with the complexity of managing growth across industry dynamics in the context of geographic competition.

reshaping organization and people

Few corporations of comparable size and complexity had ever attempted a transformation as radical and a growth objective as ambitious as Leap 2005. So there was little by the way of precedence or existing best practice to learn from. Yet, from the experiences of other companies – particularly that of General Electric – it was clear that LG’s strategic ambition could not be achieved without a fundamental change in its culture and people. This was the most important dimension of the second managerial revolution.

To fully understand how ambitious Leap 2005 was some perspective on the existing culture is necessary. As John Koo expressed, “The first challenge is addressing the distance between where LG Group is now and the goal described in Leap 2005.” Although the country and the company is emphasizing globalization our environment and cultural back-ground are not conducive to globalization’ … ‘To truly globalize the Korean people we must change their ideas about our business, ourselves and our nation. Potentially, globalization could create turmoil and confusion.’ LG’s historical culture was defined by a set of attributes that were internally consistent and mutually reinforcing. These were:

stability: the formerly protected national environment and the fact that LG Group had a conservative strategic approach had served to develop a view of the group as an unfaltering entity. Because of LG Group’s role as ‘leading second’ within the chaebol community, it had not developed a reputation of ‘high risk’ or fierce competition that its archrival, Samsung had.

people harmony: the founding chairman believed strongly in this philosophy. He endeavored to create an environment where group consensus was strong and where there was little conflict between people. Employees spoke of the group as a ‘mild’ environment. Such opinions were developed in part due to LG’s non-aggressive market positions as well as its forgiving approach to under performance. Individuals who do not perform well are not punished per se, but given opportunities in lateral directions.

respect for seniors: as Confucian values are highly influential in Korean society, respect for hierarchy and authority figures has been integral to many chaebol management structures. In addition, in stable environments past experience is highly valued. Experience, therefore, played a strong role in determining how highly individuals were esteemed. In contrast, as both the South Korean and the group environment become increasingly dynamic, qualities such as intuition or creativity will need to play a greater role in how individuals are assessed and rewarded. This in turn, posed a severe challenge to the seniority based recognition and compensation systems that have historically served as the key anchor of LG’s institutional framework.

teamwork: collectivism is a key Confucian value. Employees at LG Group work in teams (both formally and informally) and responsibilities are balanced within the teams. Socializing mechanisms insure that individuals pull their weight in teams in order to survive within the workplace.

individual recognition through opportunity: employees at LG explained that even though they performed work within teams, individual recognition was key within the culture. Due to the overriding atmosphere of equity, such recognition did not spur jealousy or rivalry, rather mutual respect. The chosen form of recognition was opportunity. Individuals who performed well were given better and more meaningful work. Throughout the group individuals were able to cross numerous functions and develop both specialized and generalist skills.

Remuneration was not viewed by employees as a key reward. It was noted that LG Group was amongst the highest paying employers within Korea. As a result, individuals knew they were well compensated in general, but actual rate of pay or changes in compensation per se did not hold significant meaning.

paternalistic management style:
employees at LG Group trust their bosses and the group as a whole to do what is best for them. As SM Oh, Deputy General Manager, Planning Team, PVC Division, LG Chemical Limited, explained, “LG is like a father, even though at times you may be asked to do things you do not like, you understand that un-equivocally, it is in your own best interest. In the long term the company really cares about you.” Such feelings have contributed to a high level of trust, loyalty and commitment within the LG Group.

high commitment and loyalty: ‘forced’ and ‘voluntary’ loyalty: loyalty within LG Group is derived from both environ-mental or ‘forced’ sources and organizational ‘voluntary’ influences. In explaining the impact of ‘forced’ loyalty Young Il Jin, President & CEO, LG Securities, described the commitment of employees to the chaebols as, ‘similar to that in a religious cult. At LG there is a strong identification with the company. Many employees feel a deep personal attachment to the company.

This is in part due to the fact that after the Korean war there was a limited labour market. People felt lucky to have jobs.’ Such feelings were reinforced by the lack of any social welfare system in South Korea. Wan Sup Sung, Executive, LG Electronics, said, “I think the national environment was influential in creating commitment and trust. Over our history people had fear: fear of not getting jobs.”

There was much that was good in that culture that needed to be protected and enhanced. And yet, there was much that needed to be changed. The challenge for the company was to be able to protect the baby while throwing out the bath water. As John Koo expressed, “The first challenge is addressing the distance between where LG Group is now and the goal described in Leap 2005.” Although the country and the company is emphasizing globalization our environment and cultural back-ground are not conducive to globalization’ … ‘To truly globalize the Korean people we must change their ideas about our business, ourselves and our nation. Potentially, globalization could create turmoil and confusion.’

LG focused on developing characteristics that were a sharp departure from some elements of its cultural heritage. Therefore, a massive culture change became the pivotal point of Leap 2005 – the make or break factor that would determine the results of other initiatives. There were four key characteristics that LG focused on…

first it had to embed a sense of challenge throughout the group. How would the organization move from being a ‘leading second’ to an excellent first? Clearly defined stretch goals were set, based on management’s belief that ‘if our people know how to achieve a target before-hand it is not a challenging goal’. LG set a target that could not be achieved by progressive improvement, the group would have to ‘leap’ to achieve it.

second, a commitment to speed was essential. The company strived to design efficient decision making processes and management activities. It believed that developing a fast moving organization was essential to take full advantage of increasingly rapid environmental changes.

third, was a focus on simplicity. LG tried to make everything simple. This was manifested by removing complexity from management echelons, simplifying communication as well as simplifying the use of parts in engineering.

fourth, LG It decided to become boundary less. It tore down organizational boundaries that fragmented people and processes across businesses and geographic units, across hierarchical levels, and from the outside.

renewing people

The primary recipients and key drivers of the transformation process, were LG’s existing work force. The group undertook substantive programs to develop its existing high performing individuals and, in time, its more latent leaders.

global leadership program the purpose of this program was to provide participants with global perspectives in business, cross cultural awareness and competencies such as managing complexities, high performance multi cultural teams, managing business relationships and managing self effectiveness. The focus was to develop the global business leaders.

change leaders’ program this was a structured program that LG undertook in alliance with GE, EDS and Arthur D Little. It used a change model, which helped individuals learn to challenge authority in order to learn. Consultancy and communication skills were also taught.

coaching program: HJ Lee, Chairman, LG Academy, under-took the role of coach. He explained, “I am serving as a mentor to all six target Cultural Unit leaders. Concerning our change toward globalization, mentally and intellectually we understand its implications. Physically we do not understand. How it will be manifested is still not entirely clear. To guide the process I am going to be a counselor and coach to the CEOs and Presidents of the Cultural Unit’s. To be a mentor you have to convey the best things you have to your people. You let them understand and discover things by themselves. For the process to work you must be someone they respect.

I usually select two or three immediate tasks they have to solve. Training, IT, HR, developing R&D – these are our most immediate problems. I use these project tasks as a tool for mentoring. After they solve these problems the managers have self assurance. For the organization to grow quickly, power must be delegated. You have to trust your managers. If they fail you cannot blame them. It is up to the mentor to assess the subordinates carefully. Once the mentor has ascertained their capability they must fully empower the subordinate. If the managers fail, the mentor is to blame – not the manager.”

To achieve cultural change, the group’s human resource policies also came under review and transition. The new human resource ‘philosophy’ emphasized three criteria: highest capability, highest performance and highest compensation. LG sought to secure people of the ‘highest capability’, regardless of race, nationality and gender. It then utilized and developed them by providing these individuals opportunities to achieve ‘highest performance’. In return LG provided ‘highest compensation’.

The primary shift in the philosophy from some of the tolerant aspects of ‘people harmony’ to a performance-orientated culture was a difficult transition to make. LG recognized that moving from a seniority based system would not be easy. Yong Nam explained, “In the past we have not been in a competitive environment. There were no incentives or “fast tracks” per se. So to some extent everybody was happy. Making the change is necessary, but difficult.”

Based on this philosophy the conglomerate sought to hire highly talented people who possessed the ‘world’s highest competitive power’. Creating a culture to induce high degrees of ‘voluntary’ loyalty became more important for achieving necessary levels of commitment in the workplace and developing a reputation as ‘a great place to work’. LG hoped to recruit and retain personnel who possessed the following attributes: people who continuously change themselves and cope well with the constantly changing environment around them; people who liked to take risks and would aggressively pursue ‘breakthrough’; people who would lead innovation and devote their enthusiasm to cultivating people of the highest talent and people who conduct business with honesty, fairness and sincerity.

To help create an environment that would attract foreign nationals LG began to use English as the company language of choice, provide high quality living accommodation and conditions for non-Koreans and instituted career development programs that paired high potential individuals with accomplished senior executives while giving exposure to top management.

the high wire act

In 1995 28% of overall revenue at LG was generated overseas. Of LG’s 200 ‘Global Business Leaders’ only thirty were foreigners. In the next ten years LG aspired to have 50% of all revenue generated overseas and 1,400 ‘Global Business Leaders’ of which half would be foreigners. It is also planned that three to four of LG’s divisional presidents would be non-Koreans, that 20% of the executive positions in the Seoul office would be filled by foreigners and that local managers would serve as heads of all of the group’s overseas operations.

Although LG had a clear vision of where it wanted to be and had begun to develop realistic action plans for transformation, a key question remained as to how the organization would be able to fuse the favorable attributes of the existing local traditional Korean corporate culture with the necessary characteristics of more cosmopolitan organization. A successful transition could create a unique corporate culture and an enduring source of competitive advantage.

Getting customers to say yes

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Getting customers to say yes

When sales stagnates though you have a superior product that adds value to customers, what can the marketing team do to change the situation? Firstly find the answers to questions such as what was preventing the customers from at least trying out a brand that promised superior performance? Who made the purchase decision and how? Were there gate-keepers in this purchase decision and who were they?

Secondly, devise a marketing plan based on your assessment. If you want to change the mindset of the customer, change the mindset of his influencer. Find out what would make him change his mindset?

So, when you have a superior product that adds value to customers, your marketing team is pushing hard to sell it, and customers seem to accept the product. Yet sales stagnate. What do you do? This was the tricky problem facing Amara Raja Batteries Limited (ARBL). This is what they did to accelerate sales.

Amara Raja Batteries Limited, is the second largest battery manufacturing company in the India . We introduced our Hiway brand of batteries in 2001. We had carved out a significant market share through innovative methods and an unconventional approach. For example, we were the first to introduce branded battery outlets known as Amaron Pit Stops and also the first to market batteries through non traditional battery marketing channels.

Hiway batteries were meant for heavy-duty commercial vehicles and were technologically superior to the existing offerings in the market. The initial acceptance for the product was good and all the major truck manufacturers soon accepted Hiway. Having found acceptance in the original equipment market, OEM, we then turned our attention to users of the trucks, namely the fleet owners.

the market segment

The fleet owner segment in India is highly scattered. It is estimated that there are roughly 800,000 roadworthy trucks and these are owned by a large number of fleet owners spread across the length and width of India . Besides the challenge of communicating with them in multiple languages, the size of the fleet also varies tremendously from small single truck owners to mammoth corporations with more than 1000 trucks offering a wide range of services.

the initial approach

First we approached the fleet owners through the conventional marketing route. Our marketing executives approached the fleet owners and presented the battery and its advantages over the existing offerings. While the truck owners welcomed the marketing executives and listened to their presentations, the conversion rate was extremely low and sales in the after market (the replacement market) were stagnating.

As we probed the reasons for this apparently contradictory behavior of the market segment, the first outline of a possible explanation emerged: That the fleet owners were reluctant to change their choice of battery brands. And as a result, no matter how convincing a case the marketing team presented, the owners were not willing to shift.

Further, on one hand, the market was dominated by the market leader and on the other hand, numerous local players were offering similar batteries at unbeatable prices. The situation seemed almost hopeless. As we considered and evaluated the available options, we singled out customer relationship management, CRM, as a possible route and so SurfGold a CRM and loyalty marketing solutions provider was co-opted into the new initiative.

market assessment

As we pondered over the reasons for this low acceptance in the after market, we realized that there were several questions for which answers had to be found before thinking of strategy development. Why was the after market not accepting the Hiway brand?, What was preventing the fleet owner from at least trying out a brand that promised superior performance?, Who made the purchase decision and how?, Were there gate-keepers in this purchase decision and who were they?, Why was the channel, which was otherwise successful in selling ARBL brands feeling inadequate in this case?

The team consisting executives from ARBL and SurfGold-then devised a plan of action that consisted three broad categories: market familiarization, strategy development and test marketing, and national rollout.

the market speaks

As a part of the market familiarization exercise, the SurfGold team spread out into four different towns consisting a mix of metros and non-metros, contacting fleet owners, channel partners and automobile electricians. More than 100 interviews were conducted in a span of four weeks. Having completed the interviews, the teams returned to the drawing table to analyze the data for key insights and observable patterns. The survey revealed some interesting insights that we had not taken into consideration earlier.

01 battery purchase is important. but why fix it if it aint broke? In market after market, the fleet owners were saying virtually the same thing. Yes, battery is a critical component of the truck, but the current battery brand was per-forming well and they had not experienced any problems with their current brand choice, so why experiment with a new brand especially when it was more expensive to buy?

As the team dug deeper into the information, it became clear that while battery purchase was important, it was less important compared to the engine, the transmission, the suspension and the starter motor. In short it was accorded the lowest priority in the scheme of things and so the fleet owner’s level of involvement was really low. The team knew from past experience that wherever, the product category receives low priority, the customer would base his purchase decision on the basis of ‘risk minimization’. So it became obvious as to why the fleet owners were not willing to ‘fix a problem that was not broken yet’

The problem now became not how to get an audience with the fleet owner, but ‘how to make a customer reassess his brand choice in a low priority product’. Unless this was done, it was clear that Hiway was not going to get into the consideration set of the fleet owner, through a plain sales pitch. As the team kept searching for clues on how to build relationships with these customers who were scattered across the country, the answer popped up from a statement that the fleet owners were making repeatedly about their own business requirements.

02 what keeps me awake? Downtime: during the course of interviews the fleet owners repeatedly mentioned their worst nightmare: a truck breaking down in the middle of a trip. Every minute of downtime cost the fleet owner in terms of penalties, business and opportunity losses and most importantly it put a question mark on his reliability. And the fleet owners were asking– in multiple languages with varying intensities, but with singular passion– if there was a way, someone could help them reduce their downtime.

Armed with this insight, the team restated the question as: how can we help the fleet owner reduce or contain the downtime on his fleet?’ We developed a downtime map and went to work analyzing the different possible causes and the possible remedies.

After eliminating several factors that could lead to truck downtime, the team closed in on downtime caused due to electrical failures. Here, at long last, seemed to be an area where the customers need and the product’s benefit seemed to be aligning themselves. And thus was born the service called ‘Hiway Free Auto Electrical Audit’. This audit focused on reducing fleet downtime caused due to auto electrical failure.

It consisted of a thorough audit of the entire auto electrical system of a truck. The truck was audited when it returned to the base between trips and the check up was conducted by a trained auto electrician under the guidance of a direct marketing executive. A detailed report covering the various sub-assemblies and their condition was submitted to the fleet owner within two weeks from the date of the audit exercise.

03 brand choice? The auto electrician holds the key: the team also discovered from the market that the ‘risk minimization’ approach adopted by the fleet owner placed the onus of brand choice on the auto electrician. Thus while the fleet owner rarely changed his brand of batteries, he relied heavily on the advice of his trusted auto electrician, whenever the need for battery purchase arose. So the second piece of the puzzle fell into place: if you want to change the mindset of the fleet owner, change the mindset of the influencer.

The team now turned its attention to the second stakeholder in the drama. What role did the auto electrician play in the choice of brand in a battery purchase and what would make him change his mindset? We discovered that, much like the end user, the auto electrician too, was operating from a paradigm of risk minimization. After all his reputation was on the block, and if a new recommendation led to poorer performance, his livelihood was at stake. So, he was sticking to the ‘tried and tested’ brand options. Added to this was the fact that he did not have sufficient information on the Hiway brand of batteries.

04 influencing the influencer: collaboration is the key the team realized that unless the auto electrician was educated and convinced about Hiway, the battle for marketshare would be lost. So, we wove an influencer relationship program into the overall relationship program. The auto electricians were invited to a one day seminar on ‘Trends in auto electrical systems’. Those who attended the seminar were given certificates and also offered an option to conduct the audits. They were also given some tools like multimeters, which would help them, carry out their work more productively.

05 finally results! customer centricity pays: we now organized the field level execution and the program was test marketed in one region for three months. The response from both the stakeholders was so overwhelming that the CRM team decided to roll out the program on a national basis.

The Hiway Relationship Program has now been running for more than fifteen months and more than 25,000 trucks have been audited. More than 3,000 fleet owners have been enrolled into the program and the results – both qualitatively and quantitatively – have been far beyond expectations!

The sales of Hiway batteries have shown a three-fold increase and the impact the program has had on the fleet owners has been tremendous. Far from viewing ARBL as just another battery company wanting to sell its products, the fleet owners now look at ARBL as a partner who shares their concerns; someone who wants to build lasting relationship with them.

The influencers see ARBL as an organization trying to help them stay abreast of the latest developments in their fields. Someone who not only tells them what is new, but also helps them do their work better. And the channel partners? They are laughing all the way to the bank.

home truths

The program drove home some simple truths about marketing in general and customer relationship management in particular. As the team that developed and implemented this exercise, we at ARBL and SurfGold believe that the lessons here are:

01 know your customer and address his concerns
02 do not fit a solution around your product, see how your product can fit into an appropriate solution
03 be willing to stretch that extra mile! (even if it means auditing the trucks at 2.00 am on a highway 80 kms from the nearest town!!)
04 involve the stakeholders and address their concerns
05 show a genuine concern for your customer and he will pay you back amply in time