The War Will Continue

Last year, the Union Budget waved a green signal for foreign companies to invest in India (FDI) signalling a threat to the existing Indian players. But whether the Indian companies are well equipped to take the competition head on is a yet-to-unfold mystery.

The startup culture had initially appeared glamorous courtesy the hype investors and promoters usually create for funding and valuations. The culture that sounded free, fast and contemporary had attracted even the traditional school of thought talent but seemed like a ploy later when the valuation game could not be played any further. Many woke up to the truth and realised the culture of startups is over the top or is dislodged. The hiring frenzy on the basis of smart ESOPs started to fade away and hard-hitting reality unmasked the inordinately hyped or funded startup world hurting further valuations or growth charts. They then started cutting operational costs by forcing exits of costly talent. The paper money is not an ideal replacement for traditional forms of wealth creation — this is a fact that many wise people will tell you. The startup chant in the last few months have gone down in decibels—a disruption that had failed to keep the momentum going.

A David Or A Goliath?
Then there are the traditional businesses that are not really startups but only relatively so in their realm of strategising — pricing and promotions—like Patanjali Ayurveda that was founded in 2006 but appears to be making a beeline for exponential growth in the last couple of years. The company has clearly caused a disruption in the industry, a fact even giant rivals Nestle and Dabur have acknowledged. Patanjali’s hardwired branding strength appears to be its founder who personifies healthy eating and spiritual wellbeing, and as per changing tastes and preferences of the urban class, ‘anything spiritual’ seems a new fad.

The goodness of the Patanjali brand name lies in the fact that it is 100 per cent Indian. It’s unlike Indian companies that have consciously kept their brand names foreign sounding to make buyers in India believe their products are imported (implying superior quality) or create a premium or luxury aura around their desi products (manufactured locally). It’s a smart branding technique that may well work for lifestyle category but for consumer durables or electronics India is yet to demonstrate its manufacturing prowess and until then it seems the Korean, Japanese or lately Taiwanese landscape may predominantly cover the field.

When Indian economy started opening up in early 90s, the consumer durables industry saw many leading companies like BPL, Onida and numerous regional players. Today, most of them are in a bad shape and some have even vanished. Later in the decade when companies like LG, Sony, Panasonic set foot on Indian soil, the rules of the game had changed altogether. These companies had come well equipped with latest products outshining the Indian counterparts. These MNCs had primarily remained true to innovation in R&D, a hallmark that has stayed with them since the very start. Back then, these MNCs had deep pockets and considering India as a strategic market, they wanted to penetrate it targeting expanding consumer base even if it meant compromising on profitability. The Indian companies did not have such deep pockets and could not withstand the competition. Even today, these MNCs launch their latest product lines at intervals of four to six months.

The Indian market has always been fragmented and complex due to variations in geography, typography or demography. In the 90s, Indian companies were their nascent stage and unwilling to experiment or explore. On the other hand, the MNCs entered India with knowledge of handling global markets, and in order to conquer a vast market some of the best talent at leadership positions were sent by their HQs. They rewrote the rules of market viz. setting the rules of scheme management and ‘go to market’ strategies; more scientific rules of product promotions and market intelligence were deployed and disruption spread to almost everything — new products launches, consumer insight studies, pricing, advertising, talent acquisition et al. The best talent was hired, taught and groomed. Companies like LG and Samsung became the unsurpassed learning grounds for professionals and till date many MNCs, either startups or old, still have alumni from these organisations serving their top positions with élan.

What got changed dramatically and significantly was the element of human resources. Quality of manpower became the distinguishing factor in addition to the hygiene checklist of R&D, Finance, quality system and processes. LG strongly believed that trust, empowerment and accountability would lead them into becoming one of the strongest and dominant players. The skill which they had to learn was to modulate and introduce ground-breaking practices in India in a way that suits best as per the market psyche. They continued thereon to invest in systems and processes and also never lost the will to frequently upgrade or remove inefficiencies from all possible directions at each level.

The Divide
The Indian markets have not matured completely as yet akin to the fabric of a developing country like India and there is a lot of scope for the marketers of companies, both of Indian or foreign origin, to seek insights into.

There is no one typical way to describe how Indian companies work. Tatas’ style or approach of working may be totally different from how Aditya Birla Group operates and these may be totally different from how MNCs or their counterparts run their businesses in India or elsewhere. Similarly American, European or Oriental companies may also be driven by different cultural pursuits, ambitions or values. In all of this, my personal observation during the four-decade-long corporate journey has been that the deciding factors for a company leading the pack are their intrinsic values and philosophy that is usually presided over by the top management — strategy, overall and long-term objectives, and competitiveness of a company in global and local markets is a subset of their firm beliefs. These are parameters or benchmarks that remain common at global levels of competence. It is their approach and trust in a local market where they want to enter that pushes the envelope. Having said so, ultimately the market, the customers and sense of survival decides whether the approach they picked stood the test of time and whether they managed the expectations well.

The drawback with some MNCs at times is that market-driven solutions are not provided promptly as they are guided by their HQs. They need more agility and quick footedness. Indian corporates have to continue investing in R&D and quality of systems and processes along with a clear and distinctive approach in enabling the HR systems. The law of the land must be followed at all times with a deeper focus on operational excellence and bringing forth the best business practices. Indian companies need to prove their acuity in areas of execution more explicitly. Until then it doesn’t matter who is a David and who is a Goliath. That gets decided by the execution strategy of companies and its success.