Jet Airways – Positioning lessons from its crash landing!

On Wednesday last week, as I was queuing up to board an Air India flight to Delhi, I could see the tarmac at the Mumbai airport lined up with idling aircraft of Jet Airways, whose operations was being cut down by the hour. Eventually, by evening the airlines shut down its operations completely, albeit “temporarily” as per the company’s statement. And in a twinge of irony, the last flight was a Jet Connect flight from Amritsar to Delhi that landed in Mumbai in the wee hours of Thursday.  I say “in a twinge of irony” because one of the reasons for the airline to get caught in turbulent weather, was its many experiments in positioning wrongly so, trying to compete with budget/low-cost airlines with Jetlite, Jet Connect and so on, when it hit financial air pockets way back in 2009 and later.

Unlike this generation, people born before the pre-liberalisation took their 1st flights when they started working! So did I. Way back in the early 1990’s for the initial few years, it was all Indian Airlines for work related trips. Though Indian Airlines in that period wasn’t bad, when Jet Airways burst into the scene, post opening of the sky along with other private airlines like East-West, Damania, Modiluft and so on, it brought in a whiff of fresh air. I remember vividly those times. The airports with inadequate infrastructure to handle the explosion of airlines and traffic, by and large resembled railway terminus’s and bus stations with multiple loud announcements of arrivals, departures and boarding calls.  “Chaotic” was an oft-repeated description of airports, then.

Amidst all the initial slew of private players, only Jet survived. It is clear that Naresh Goyal, the original promoter of Jet Airways had mastered the one core competency that mattered to excel in business in India – that is of “managing the environment”! But, I must admit that apart from managing the environment, Goyal could get another aspect of business right. That is of managing customer needs and experience well.

In those initial days, –  I am referring to the mid 90’s, Jet Airways experience was really out of the world,  particularly for frequent flyers. You could tele-check in and get your favourite leg space seats without much of an issue. Upgrade vouchers could actually be used to upgrade to business class even at the airport while checking in. There was a wide variety of meal options apart from just Veg and Non Veg. In fact for breakfast, in Vegetarian, they used to have South Indian and North Indian choices!  Dinners were 3 course meals. Hot and cold towels were provided even to Economy passengers! You could redeem your award tickets without much fuss and disappointment. In the initial few years, one needn’t pay even the taxes for award tickets (That changed pretty soon). With fares almost same as of other airlines, there was no reason unless otherwise the flight was full, to look at alternative airlines! I can say that from a user perspective, it was truly a golden era for Jet Airways!

The golden run for the airline continued in the 1st decade of this century, but with conditions attached. This was when it became a market leader by way of market share and leadership pangs started catching up. But still, due to its superior service and its On-time record, it was business travellers’ first resort.

The advent of low cost or budget airlines in the scene in India somewhere around 2006, must be one watershed moment in the history of Jet Airways. Captain Gopinath, the founder of Air Deccan redefined airline business in India with his no frills, low-cost offering exemplified by R.K.Laxman’s “common man” as the brand mascot. By lowering air fares to the extent of making it cheaper than train fare, Gopinath ushered in a whole set of middle class travellers into flying. In doing so, Gopinath with Air Deccan became of subjects of case studies in B-schools. The whole landscape of air traffic changed so fast in that period that, Air Deccan with its mindless pricing strategy, ended up disrupting itself and few other airlines on the way.

The global recession of 2008 and the cost consciousness that ensued among corporates world over, brought the curtains down on the party of the expensive, premium priced, full service airlines. In India, it meant Jet and Kingfisher who were truly premium, full service airlines at that time. This is where, I feel Jet was caught in the wrong foot. When it started losing market share to low-cost air lines and new entrants like Indigo, Go Air, Spicejet… Jet decided to pursue its own “budget airline” strategy which in my mind was a big mistake. Extending the brand is a trap which many companies fall into, with their eyes wide open.  Here, Jet Airways, hither to a market leader with a full service offering and impeccable service reputation, decided to extend its brand and launch a budget airline called Jetlite and then later Jet Connect. At the outset, it seemed like a smart strategy to prevent losing market share to the newly launched low-cost carriers, that too in those prevalent muted global economic conditions.

In the process, what happened was a systematic dilution of the brand equity of Jet Airways and all it stood for. In the name of cutting costs, service offerings were trimmed. It was no longer a frequent flyer’s delight. Service started falling apart. I started seeing the writing on the wall sometime in 2011/12. You could never get a seat of your choice even when you web checked in early! Choice of food became limited. For a flight taking off at 7.30 pm, instead of dinner, a snack meal was beginning to be served! Even the After mint (post meal mouth freshener) which was served in Jet Airways in the beginning, which became so popular that it was sold in super markets and stores as Jet Mukhwas suddenly disappeared from the in-flight meal. Here, I must add that I have seen many passengers asking for extra sachets of the same and hoarding them to their homes!  Award ticket redemption process now online, became a farce. There were just few seats for award tickets in a flight and you would never get them. If you redeem award tickets for your family, seldom you will get confirmation of the same while you book. Upgrade vouchers became just pieces of paper because upgrades were limited to few fares.

In the midst of all this, Jet’s financial woes only multiplied. A mistimed acquisition of Sahara Airlines only worsened the situation. Few quarters back, realising its original mistake of taking the budget airline route, Jet jettisoned its low-cost brands and decided to stick to just its full service offering. Considering the fact that global economy had revived, I thought that it was a wise move and hoped that Jet will soon be back to its glory!  Well, it did not. The low-cost hangover continued. The pricing was of full service. But the service was of budget airline! Can you imagine as recently as in Feb, on a 5 and a half hour flight from Mumbai to Singapore, there were no personal screens and one had really sleep through to kill time? And my co-passenger who requested for a glass of water got it after reminding the crew for the same at least 3 times! And of late dinner served in Jet Airways resembled more like junk street food! And I can only say that Jet’s frequent flyer programme – Jet Privilege which was once upon a time really world-class, is a pale shadow of its former self! Jet Privilege was such a strong brand that Goyal hived that off as a separate entity and monetised it. Even that infusion didn’t help to improve the user experience, though. Keeping the financial troubles aside, I was of the opinion that Jet was sinking as a brand anyway! And the culprit was its positioning! Was it a full service airline with offerings of a budget airline or was it a budget airline that was overpriced??

What if, had Jet continued to stay the course of a full service airline?

What if, in that period when low-cost airlines were mindlessly cutting prices, had Jet focused on “business value flyers” and on superior service?

What if, had Jet went after bottom line instead of preserving market share in that turbulent economic period?

So many what ifs! As I said, in hindsight, pontification is easy. But this hold lessons for companies for the future. After all, business cycles repeat themselves.

Having said that, singling out Jet is also a tad unfair. Airline business globally is a tough business to wade through. One that requires continuous infusion of Capex and which sucks up huge Opex. Only airlines that have thrived are those protected by state monopolies or those who have got their positioning and cost efficiencies correct. In India, the woes of Airline industry have been compounded by high taxes, fluctuating fuel prices, high interest rates and crony capitalist policies. In the history of Airline Industry, Jet is only the latest to bite the dust. Before, we had East-West, Modiluft, Damania, Air Deccan, Sahara, Kingfisher, Alliance Air and myriad other smaller airlines which all exited the scene in one pretext or the other! And we all know how Air India has managed to pull through while being in ICU for so many years.  And it is also clear that the other airlines are all clutching at straws and managing to stay afloat. That must really beg some critical policy related questions among the policy makers in India. While on the one hand trying to expand air travel to smaller towns in India, is the current Aviation policy regime really business friendly?

Seeing an Indian brand, which was once upon a time close to world-class fold up, is really unfortunate. Hope wisdom and luck prevails and we soon see Jet get its Jetwings of yore!

Image courtesy: https://www.thenational.ae

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Nano – Tata’s and India’s miss!

Tucked in between the noisy and newsy headlines in India in the last week around Love Jihad, Rahul Gandhi’s religion, Ivanka Trump’s costumes in Hyderabad and other inanities, was a poignant news bit about the Nano car. Poignant, because it said that dealers have stopped placing new orders for the car and in the month of October, just a measly number of 57 cars were shipped. And this led to political jibes from Rahul Gandhi that the PM’s pet ‘Make in India’ project just died. He also tweeted that Rs. 33,000 crore of tax payer’s money and that too of Gujaratis’ turned into ash. Coming in the midst of a vitriolic election campaign in Gujarat, one can excuse politicians for spicing up their speeches without looking at the larger picture. The point is taking potshots at Nano’s failure is taking potshots at India. Failure of Nano is not just a failure of Ratan Tata or the Tatas but a blot on India.

Cut to year 2008, when Nano was first launched, it was the biggest story of India Inc. ever. When Ratan Tata initially announced that Tata Motors is working on a Rs. 1 lac (US$2500) car, it was met with excitement and skepticism in equal measure. So, finally when Tata did launch the car with a price tag of Rs. 1 lac, the world did look up and notice. Finally, here was a car which was conceived in India, designed and developed by Indians with indigenous technology and manufactured in India that broke all cost frontiers unimaginable by car manufacturers till then. Overnight, Ratan Tata was the toast of the nation.

Around the 2008-10 time period, whenever I met any foreigner from Japanese to Americans, our conversations invariably touched upon the Nano car and how this was pulled off. And those visiting India always wanted to see a Nano car on the road and take a picture in front of one. Selfies didn’t exist then! The Chairman of a well- known Indian group who drove a Camry, proudly told me that he was the first among to book a Nano in Mumbai and to get delivery as well. At that time, Nano was yet to be seen in big numbers in Mumbai. But on a visit to Colombo in 2011, Nano had already captured the “Budget Taxi” space there. Media was full of interviews of not just Ratan Tata but also of the R&D engineers who had designed the Nano.  Nano’s launch was the culmination of a series of stories in which India Inc. was part of then. It was believed that Nano would be a live case study for C.K. Prahalad’s “Fortune at the bottom of the pyramid” theory!

That was not be and the excitement around Nano soon started tapering. Unfortunate incidents of the Nano going up on flames on the road didn’t help at all. For a product which was expected to expand the car market by 65% or so, the sales was plateauing around 70,000 Units a year for 2-3 years before nose diving to what is a few hundred cars this year. The failure of the Nano car must be one of the most analyzed and discussed case study in B- Schools, I reckon. Most of what I have been reading, attribute its failure to the “positioning” of the car as the world’s cheapest car in the beginning.  The Quality failures adding “fuel to the fire”. Attempts to re-position the car as a “Cool Urban car”,… didn’t help either. I have a different view on the reasons for the failure of the Nano car. But will keep that for another blog.

In business, they say there is no room for emotions and decisions need to be taken based on just commercial considerations. The ousted Chairman of the Tata Group, Cyrus Mistry recently said that during his time it was decided to pull the plug on Nano as it didn’t make commercial sense, after attempts to revive the project failed.  As of now it hasn’t happened. The current Chairman Chandrasekhar has been more considerate, probably towing Ratan Tata’s emotional line. He has said that there is a need to take a more “holistic” view on the Nano project. And I tend to agree.

Nano was not a Tata story. It was and is an India story. Ergo, failure of Nano in a way is an indictment on the capability and potential of Indians. And as somebody said, “Nano was not an Idea. It was an ideology!” Ideas can fail. Ideologies need to linger! The failure of Nano soon opened up to “We told you so” and how can Indians pull it off” jibes. For a 3rd largest economy (GDP-PPP) in the world, India is yet to throw up globally renowned home ground brands. So far, it’s been the soft power brands like Ayurveda, Yoga, IIT and the likes which have been torch bearers for India globally. Let’s keep aside the Software brands like Infosys, Wipro,… aside for the time being. In one of my very early blogs (read here) on different styles of management, I had opined that for the world to recognise, acknowledge and adopt the “Indian style of Management”, we need stories of successful Indian companies and brands. Just like how the world adopted the American way or Japanese style when their companies were successful. And that opens the door for Indian companies, Indian products and we Indians in the global arena. Nano was uniquely positioned to be the 1st homegrown successful Indian product brand. There was an opportunity for India Inc. to have “arrived” in style. Not just that. Success of the Nano would have led to similar pushing of cost and design frontiers by other Indian companies in many other product categories. It would have opened the floodgates for Indian CEOs to apply the “frugal innovation” concept in other products. Hence my fervent hope that Nano should succeed.

So, when it failed as it has now, it has pushed back the India Inc. story by few years till we stumble upon the next Big Idea. In the meantime, Nano I believe, is slated to make a comeback in an electric avatar.  Will this avatar help Nano to claim the position of “the common man’s car” in Indian market that Ratan Tata originally envisioned 9 years ago? The world in no longer watching it with the same excitement of 2008. Away from the arc lights, the original billion dollar opportunity still beckons!

A quote alluded to Ratan Tata says, “I don’t believe in taking right decisions. I take decisions and make them right!” Nano might have been a glaring exception to this. For Ratan Tata’s sake, Nano-II should set the record straight. For India’s sake too.

A BMW formula for Indigo!!!

Earlier this week, a video clip of 2 staff members of Indigo Airlines manhandling a hapless passenger on the tarmac made news headlines and occupied Prime time news in India. As expected, the clip also went mega viral on social media quickly. Since then, there has been no end to various jokes and memes, all at the expense of Indigo Airlines.  Even the usually reticent Air India joined the party with their ads trolling Indigo for their high “handedness”! An ad on behalf of Jet Airways floated too which later was disowned by Jet Airways themselves as fake. In short, it was Indigo’s unfortunate “United” moment!

The response of Indigo to this incident which apparently happened in the mid of October seemed bewildering. They had sacked the employee who had shot the incident and probably released to the media. The media portrayed this as Indigo being vindictive of a whistle-blower! To be fair, they tendered a public apology to the wronged passenger. And submitted a detailed letter to the Minister of Civil Aviation giving their side of the story. The letter indicated the reasons as to why the two employees who were involved in the manhandling incident were let off with warning while the so called whistle-blower was sacked.  However, by this time the damage had already been done!  Whether this incident and the bad mouthing that followed will make passengers re-think about flying with Indigo is a moot question.  Flyers being fare conscious may still fly Indigo if their fares are lower than others.  But, everything being same, one may tend to tick another airline at least in the short run. So, the pressure will be on Indigo to keep their prices down all the time particularly with the year-end peak holiday season coming up.

I have been a fan of Indigo’s marketing for a while now. Their marketing messages have been crisp, humourous and quite creative. For a company which had a well-crafted, clean image thus far, this incident has lent a heavy blow.  Having said that, this can happen to any professionally run organization in any line of business. Companies, particularly in the service delivery business, do spend man hours in imparting training to employees to develop their soft skills. Still, a bad product or a bad mood or a moment of indiscretion of an employee on a wrong day can spoil the carefully cultivated image of a company.  Here’s where companies need to have a clearly laid out “Recovery” strategy whereby you not just contain the damage but also look to benefit from a bad episode.  A Recovery model which follows what I call as the “BMW” formula. Nothing to do with the brand BMW but meaning “Be repentant, Make Amends quickly and Wow the customer!

Let me narrate a recent example of my good friend Adinarayanan’s experience with ID Fresh Foods, a company which is a case study in itself for a successful startup in India these days. Adi purchased a packet of ID Parota and to his surprise found only 4 pieces instead of 5 as mentioned in the packaging.  He reported this to the company thro e-mail on the customer care id mentioned in the packaging. Within 2 hours, he got a response over e-mail, where they acknowledged the problem, apologized for it and assured resolution of the same.  And within a day or two, he indeed received a fresh packet of Parotas. The story didn’t end there. Along with this, he also received a packet each of other products of Id Foods!!!  So, my friend more than being just satisfied with the company’s gesture of making good his complaint, was now delighted. He wrote about this in a detailed post on Facebook (by which I came to know) which must have been seen my many of his friends as well!  Since he tagged ID Foods in this post, the post would have reached more than just his FB friends!  ID Foods also ended up doing a small publicity for their other SKUs by this gesture. Many birds with one stone! Not to mention of this narration in this blog post!

If you analyse this, ID foods followed the “BMW” model quite diligently. They responded with an apology, didn’t try to be defensive and hence were “Being repentant”. By sending a fresh product and that too within 2 days, they quickly Made amends. And finally by sending a packet of their other products, they Wowed the once disgruntled customer.

Going back to the Indigo episode, Indigo stopped with Being repentant. They didn’t attempt to Make Amends, forget trying to Wow the customer. As soon as the company learnt of this episode, its President Mr. Aditya Ghosh admittedly called and apologised to the passenger. Great gesture of Being Repentant. Now imagine if they had sent the staff who manhandled along with a senior manager to the passenger’s residence with a bouquet of flowers and a Sorry card. And for safety sake, got this video graphed. And imagine further what would have happened if the irate passenger gets a free travel voucher from Indigo the next day delivered at his residence?

Following the whole BMW Recovery formula would have costed less than Rs.5000 to Indigo but would have earned them an elated customer who probably would talk about what the Airline did later rather than the original manhandling.  Now in spite of all this, the original clip would have still been leaked to the media and would have still created havoc. But having followed the BMW formula religiously, I believe the damage would have been much less. The company in response can also use the same social media to release the clip of their visit to the passenger’s house to mollify him.

Having a well laid out BMW formula where the employees are empowered to take suitable calls I believe, is critical to handle unfortunate bad experiences of customers.  In this whole Indigo episode, lies another important lesson for companies – “To have satisfied customers, have satisfied employees first.”

Postscript: The topic of “having a recovery strategy” is also one which usually falls under “What they still don’t teach you in Harvard (any) Business School!” However, I clearly remember our marketing professor Mr. Tarun Gupta painstakingly talking about this while covering ‘Services Marketing” which till this day echoes in my mind. TG who is revered as a Marketing Guru in Pharma circles with a trail blazing career in companies like Glaxo, Ranbaxy,… passed away on the 31st October at the age of 78. This post is my humble tribute to him. May his soul Rest in Peace.

Pic Courtesy: Amul 

Ad today, Sad Tomorrow – A Brand Ambassador’s soon to be story!!!

Since the time, Sindhu won a Silver and Sakshi a Bronze for India at the Rio Olympics, their phones (probably endorsed by a Kareena or an Alia) I guess haven’t stopped ringing. Or perhaps their managers’. For, many brands are on their way to signing them as brand ambassadors. For now it’s O.K., for Sindhu or Sakshi to sign on the dotted line in these endorsement contracts and make hay while the medal shines. However not if the Government pushes forth the changes in the Consumer Protection bill which proposes jail term and fine for celebrities in case of misleading advertisements for products they endorse. The intention being to make celebrities also responsible for products they endorse apart from the manufacturers. “Consumers tend to get influenced by the promise made by the celebrities in ads” is the argument behind the proposed move.

As a marketing professional I have never been very excited about using celebrities in ads to push a product. In B-schools every year, one popular project students carry out with the blessings of their professors is to find out the effectiveness of celebrities in an ad campaign. That the study is done regularly conveys that the jury is still out on that. At a superficial level though, it is commonly accepted that use of a celebrity helps break the clutter and differentiate the ad. Though as per me, this is “laid back, lazy creativity” as there are indeed many other ways to break the clutter. Using celebrities is of course a low hanging fruit for those with big budgets and is often deployed as a creative strategy when one can afford. I just realized that this piece is not on whether to use celebrities or not in ads. We will keep that for another Sunday. But on the proposed changes in the law which could stop the party on its tracks for the so called Brand Ambassadors.

Going back in time, I think ads whether print or TV just had people featuring in them and were called as models. And then slowly the practice of plugging in celebrities like actors, sportspersons,… crept in as I mentioned, probably to make the communication stand out. I am not sure when this “celebrities modelling” for an ad morphed into “endorsing the product” and then as we see now becoming “brand Ambassadors” for the company.

She looks like Sonia Sahni to me.

As long as celebrities “featured” in ads for products I guess they were just plain actors parroting some lines. But when they started endorsing brands (making a killing in the process) – that’s when I guess they came into the ambit of influencing buyers’ decision and of course within the prying eyes of lawmakers. In my understanding there are 2 types of celebrity endorsements. First, where a celebrity is used to promote a product which is related to what he/she is doing and is a direct endorsement. For example – A Sachin or a Kapil Dev being used to promote ‘Boost’- an energy drink for children. When Kapil says – “Boost is the secret of MY energy” there is a clear communication to moms that “if you want your child to become like me, do consider giving Boost to your kid”.  Or when Katrina Kaif says – “if you want a smooth skin like mine, use Lux Soap”!

The second category is where brands just use a celebrity as a face in the ads and the products may not be related at all. For example – Amitabh Bachchan featuring in Binani Cement ads.

And probably there exists a third category – where the product is not related to the celebrity’s field of normal work but companies tap into the credibility of the star to push their wares. Though this is not common, we have started seeing this of late. For example, when Cadbury’s wanted to make a comeback after they got hit by the “worms inside chocolate” tornado, they dialed in Amitabh. Amitabh featured in the commercial as “himself”. See the ad here. As you can see in this TVC, he was clearly putting his personal credibility at stake to communicate to consumers that with the many steps taken by the company, “All is well” with the chocolates!

(I’m not considering the social awareness campaigns using celebrities for the moment)

In the whole business of celebrity endorsements, many questions do arise. Do the celebrities who extol the virtues of brands use the product/service themselves? Have they first checked if the claims they are making are true? In the case of endorsing for investment projects,.. do the celebrities vouch for the credibility of the promoters?

The thinking behind the proposed changes in the law seems to be after many instances of consumers landing in the pit after they invested their hard earned money in projects which also had big stars endorsing the same.  At the same time, there have been so many cases where consumers lost money in projects where stars were not at all involved!

It is difficult to believe that consumers are so gullible that they buy a product just because a star endorses it. This premise seriously underestimates the intelligence of a consumer. If just a star endorsement can make a product tick, all those mobile phones with celebrity brand ambassadors must be outselling the I-phone isn’t it???

But whatever it may be, punishing celebrities for wrong claims of a product because they feature in the ads seems a bit farfetched.  A consumer is expected to do his/her bit before deciding to buy a product/service. More so in the case of big investments. Putting the blame on a M.S.Dhoni just because a real estate project he endorsed didn’t see the light of the day is sheer escapism, I believe. I think we should consider celebrities featuring in ads as enhancing the entertainment quotient and nothing beyond that. At the same time as a socially conscious individual a celebrity should be careful in lending his/her name or face to a product which has inherent health concerns a la Gopichand who refused to feature in Cola ads in his prime time! And also do a bit more homework on the credibility of the brand/promoter before signing on the dotted line for the next 1 crore endorsement deal. Or else post the new law it will be “Ad today, Sad tomorrow”!!!

Post script: Will be interesting to know in which category of celebrity endorsements does the Jio campaign featuring our PM fall into???😝😝😝

Waking up “Make In India”!!!

In a week from now, Mumbai will host the “Make in India Week” – an event planned to give fillip to one of Modi Sarkar’s flagship program – Make In India. This was aimed at reviving the interest of domestic and MNCs in setting up/expanding manufacturing footprint in India – a sure shot elixir to tackle the unemployment malady and create millions of jobs. When this Govt. kicked off this initiative, one would have expected more cheers than jeers. However the reality was different. Leaving aside the noises from the opposition which anyway criticizes what the ruling Govt. does in India (this is irrespective of who is in power and who is in opposition), the naysayers included reputed economists and thinkers. They were of the view that it was too late for India to board the “Manufacturing” bus. China is already in the driver’s seat being the “factory for the world” and global companies are already heavily invested in China. Also the general view that with increasing automation in the shop floor, you don’t need much of low cost labour for manufacturing. So betting on manufacturing to generate millions of jobs may not be a cool idea any more. The session during the recently concluded World Economic Forum in Davos about “The Fourth Industrial Revolution” powered by Connected devices, 3D printers, Super Smart Robots and the like,… probably put paid to this idea of the critics. So instead of playing the catch up, the cynics’ view was that India should play to its strengths namely “Services” and invest further in developing soft skills to scale up further.

There is probably merit in this argument. However if one analyses the different states of India in terms of the economic condition it is clear that no state can hope to survive and grow by just focusing on services. For a diverse country like India with a huge disparity in income and social strata an even economic growth can be achieved only with a mix of manufacturing, services and agricultural activities. The top states in terms of GDP in India like Maharashtra, Tamil Nadu,.. have a very healthy mix as I noted in one of my earlier posts on “Car manufacturing” in Chennai (Read here). A fourth Industrial Revolution may augur well for developed countries with shrinking population, ever rising wages and diminishing demographic dividend but in India we still need to reap the benefits of the 2nd and 3rd.

So I think that this Govt. is right in pursuing the Make In India initiative particularly at a time when China is facing economic headwinds. The labour in China can no longer be termed cheap with wages ever-increasing to keep pace with the aspirations of the people. Many of the global corporations do not want to put all eggs in one basket that too Made in China😁😁. I know for sure that the Japanese are expanding into Vietnam in a big way for production. So could be other countries like the US, Germany,…,.. soon. So the moot question is are we positioned well to make them Make In India??

logo 2

As the logo of India’s Make In India program demonstrates, there are many cogs in the wheel for a country to be successful in manufacturing that too for the world. Cheap and Skilled labour, Vendor base, Access to cheap raw material, Quality awareness, Access to ports and logistic hubs (particularly for exports), flexible labour laws, Ease of doing business (which applies not just for mfg.) and above all a very efficient infrastructure (Roads, airports, ports, broadband connectivity,..,…) in short a “pro manufacturing eco system”. And for India while all the other cogs could fall in place over time, the biggest challenge is in infrastructure. One would argue that the eco system will be in place when growth picks up and factories are set up. Necessity is the mother of everything you know. For example wasn’t Gurgaon just a “Gaon” before Maruti?? Today it is a recognized Auto mfg. hub. Similarly there are many examples of PSU Units which were set up first which then turned out to be manufacturing hubs in course of time. Goes the argument. No argument can be more specious than this. Maruti was set up at a time when India was a protectionist state where the promoters (in this case the Govt. of India) can patiently wait for more than 10 years for the 1st car to roll out! Same is the case with many PSU units where the overarching mission was upliftment of the society rather than shareholder value or profits! Not in these “QSQT” (Quarter Se Quarter Tak) days!!!😁😁 And in these days of strict WTO regime the Government cannot slap high duties on imported goods to protect the local manufacturers.

So for Make In India to succeed India needs to get the Eco system right first up. While India has a natural advantage in some aspects like availability of not just cheap labour but also skilled, large Engineering pool,.. the road is long for areas like “Ease of doing business” and Infrastructure as I mentioned before. And fortunately the Govt. has rightly recognized these challenges. Its’ for the 1st time that a Govt. website has spotlight on “Ease of Doing Business” like in the Make In India home page, I reckon. See here. It was a pleasant surprise to see the list of initiatives already taken and ones on the way when I clicked on “Ease of Business” tab. And it is also great to see every day in Newspaper one state or the other hosting Investor summits to lure potential investors with Make In India being an important aspect. So while pitching for investments is all right, I think the state Govts. must also focus on getting the infrastructure in place in their respective states which helps not just manufacturing but in general fosters economic activity. Today inspite of higher labour costs if many companies are still outsourcing mfg. to China it is because of their fantastic infrastructure overall which helps to keep indirect costs lower. India’s labour costs is lower but the indirect costs due to poor infrastructure weighs us down.

I think now the world is quite convinced on the intent of the Modi Sarkar to promote Make In India. Now the time has come to morph the intent to reality by focusing on Infrastructure for which the states have to work in tandem with the Centre. That’s what will wake up Make In India and not the raking up of intolerance debate every other morning😩

Make in IndiaToon courtesy: Satish Acharya

Jugaad Vs Anti-Jugaad!!!

In the last 2 weeks, 2 TV ads for different products by 2 different agencies but surprisingly around the same theme of Jugaad caught my attention.  One is for Sulekha.com and the other for Exide Life Insurance. Jugaad is India’s contribution to management theory or so it appears. That the word ‘Jugaad’ has a Wikipedia page attributed to it means, it “has” arrived. And I think it had arrived a decade ago. When we started seeing this term being bandied about in management lecture circuits and HBR articles in the context of a Rising India. Yes the same time when BRICS broke into investment strategy discussions around the globe. For the uninitiated, Jugaad is a colloquial Hindi/Punjabi word that can mean an innovative fix or a simple work-around, used for solutions that bend rules. (Courtesy: Wikipedia). One of the very popular examples of Jugaad which has been trumpeted about is the use of old run down washing machines as giant Lassi makers in dhabas of Punjab😤

So what was new in Jugaad?? The concept of Jugaad I believe emanated from the Indian psyche of use first, then re-use, then repair and use and refuse (to throw i.e.). So when you have a problem in hand, as long as you can just do something and fix it and Chalaofy, its fine. These days for our kids, when their slipper snaps, Snapdeal delivers a new pair the next day. In our time, when a slipper gave way, a safety-pin first came to the rescue to pull along for few days. When that also failed, the cobbler under the nearby tree stretched the life of the slipper for few more days. So the immediate instinct was to do some Jugaad to get it going before we buy a new pair.

It was but natural that the word entered the workplace soon. At factories, warehouses, offices – if there was a problem the first attempt is to do some Jugaad and fix it. And in interviews – questions like “Are you a go getter?” gave way to “Are you a Jugaadu??”😜😜 A supposedly smart cookie who can think quickly and provide a cheap and quick fix for problems at work. So the underlying association for Jugaad was that the solution must be quick to implement, cheap and can be a short term compromise. Nobody expected a Jugaad to be a “perfect” solution.

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Now this runs antithesis to probably a Japanese way of thinking. In Japan, solutions are found after a lot of thinking (so not a quick fix), they need to be perfect (turn out to be expensive) and for the long-term.

So I guess the Jugaad instinct is all to do with the economic status of the country and its people. In countries like ours which is still aspiring to be a developed country, our priority is to have a fix. Not be a perfect fix. Need not be for long-term. But should be cheap and quick. While this approach has paved the way for eulogizing the concept of Jugaad as a means of “frugal innovation” in countries like India, it also has its shortcomings. As can be seen in our day today lives. For example in the way our municipality fixes potholes in roads. Just fill up quickly with metal and tar and level it only to do the same exercise again in a few months. A Jugaad solution can prove to be a long-term pain and an expensive proposition. In this context, I am uncomfortable with raising Jugaad to a global management technique and all that jazz.

Ergo, interestingly I notice that the same concept which till recently had a positive overtone is taking a negative innuendo. The liberalization and the Software boom have changed things and thinking. These days we deploy less Jugaad in our lives. And we it seems now need long-term, Quality solutions even if expensive. Now coming back to those 2 TV commercials. As can be seen in these 2 ads Jugaad has given way to Anti-Jugaad and the till now venerable Jugaadu is being loathed upon. In my last post “Writings on the walls” (Read here) I wrote about the aspirational India taking wings in the heartlands. I see this emergence of Anti-Jugaad as another instance of the emergence of Aspirational India where the expectations of people have morphed from being just satisfied to yearning for more.

So, are the days numbered for Jugaad in India? May be not. But the question is – As the country which popularised Jugaad is there a “Good Jugaad” which we can still retain and a “Bad Jugaad” which we will have to do away with?

Postscript: As I am typing this racing against the iPad’s battery life, is there a Jugaad for the iPad’s battery life??? Please call me😜😜

Shuddh Desi Maggi!!!

First the disclosures. I am not a big fan of the 2 minute wonder – Maggi Noodles ever to have hit the Indian palate and plate. In all my life, I would have tasted it may be a few times and I detested it every time. Even when mixed with curd as how Bollywood stereotypes we Madrasis to eat even Noodles 😠. I don’t have nostalgic memories either of how Maggi Noodles helped thwart hunger pangs during some mountaineering expedition,… like how some adults professed as part of the Maggi campaign. The daughter though loves it. And wants more of it. Much to the dismay of the mother and the father. I also don’t have any commercial interests going with Nestle nor do I have a Swiss bank account!!!

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But I have a lot of interest in India and the signals it sends across within the country and outside as a place not abhorrent to business.  In the last 2 weeks, we all know how one Pandeyji from UP got his 2 minute fame under the sun after he picked up few Maggi Noodle packs, tested and declared that the contents were out of set limits. Many other states followed and soon Nestle had no choice but to pull their 2000cr (US$300mn) flagship product off the shelves and indeed away from the mouths of many a child and even grownups.  Leaving many a moms feeling surreptitiously happy when they found a way to desist the urge of their offspring citing the ban 😃.

In India, Newton is a much misunderstood man. When it comes to anything foreign, his 3rd law becomes “For every action, there is an unequal and opposite knee jerk reaction”😄 Either we go gaga about something phoren or go suspicious. There’s nothing in between. I am not for a moment questioning the veracity of the ban or arguing that Maggi noodles is above-board.  I am also not taking the oft-repeated line that in India there are so many other food items if tested would flunk all norms. Just that if the same situation would have been handled in a more compassionate way with a perspective view by the authorities, the Indian republic would not be viewed as a banana type!!!

For example, what if the same situation had played out like this:

  • Pandeyji picks up samples of Maggi noodles, tests the same and finds that the contents are beyond norms.
  • He informs the Central agency – Food Safety and Standards Authority of India (FSSAI) about his findings. (Instead of going to the press and banning the same in UP. What if it was just a batch issue??)
  • FSSAI arrange to do its own tests to ascertain the claim and also make a foolproof assessment. And let us assume that they indeed find the lead content above specified limits.
  • FSSAI informs the Food ministry of the same.
  • Food ministry calls the top officials of Nestle India for a meeting and they inform them of the findings. And gives Nestle couple of weeks to do their own assessment and come back.
  • Now its upto Nestle to accept the findings or prove with their own test results that they are in the right.
  • And if indeed Nestle finds that they are in the wrong, the onus is on them to come up with a plan of action to correct the situation. Temporary recall, change of recipe,…,…
  • They work with the FSSAI authorities and change the recipe of the taste maker which is tested and approved as within norms.
  • Nestle does a launch of the Govt. of India Approved ‘Shuddh Desi Maggi” Noodles with an appropriate campaign and continues its business as usual.

Product recalls on account of genuine safety concerns happen world over all the time these days. A more calibrated approach would have allowed the company time to work backwards with their whole supply chain – producers of atta/maida, spices, suppliers of the atta/maida, the factories which produce the noodle, the factories which make the packaging, transporters, whole sales distributors, retailers, kirana shops,..,.. to minimize damage. I just read a news item today that 300 in a company in Moga, Punjab that supplied spices to Nestle India lost their jobs due the ongoing Maggi noodles tangle.  I am certain under the current uncertain situation, many more will follow. Quietly not just Maggi, but the entire category is off the shelves I am told.

Some are of the view that Nestle itself could have handled the situation better. But I thought that by voluntarily agreeing to pull the brand off the shelves without getting into arguments regarding the test methods,.. they did the right thing. Now from here on they could take some lessons from Cadbury – another brand which faced a much worse situation few years ago. The relaunch of the Cadbury Dairy Milk chocolate after the brand faced much ire when worms were found inside the chocolate wrapper is part of marketing case studies in India on the topic of “Recovery Strategy”.  The 2 minute Maggi Noodle must take a 2 months strategic time out and get the formula of their taste maker right not just for my daughter’s palate but also Pandeyji’s.

We have a Prime Minster who is desperately wanting to change the business climate in India and boost investments foreign and Indian. Unfortunately, episodes like the Maggi ban of this kind do not augur well for his intent.

Postscript: A friend told me that the Maggi ban and strangulation of Nestle is our Govt.’s trump card to make the Swiss authorities co-operate and reveal the black money offenders. Wah! “Covert” operations under the Modi regime have gone to a different level I must say😊😊

Image courtesy: NDTV.com