Even as Bollywood’s Rs 100-crore club is gladly accommodating new members with films continuing to break box office records, there is a significant (urban) demographic that downloads and streams new releases almost simultaneously through internet. While piracy and issues related to intellectual property rights threaten the longevity of the kind of content that populates YouTube and similar channels, the Net viewership of such content is a guaranteed fact.And this makes S. Mohan highly optimistic about his latest venture, Spuul, an online digital media streaming service. A serial entrepreneur, Mohan has had many trysts with technology enterprises and as the co-founder of Sppul Digital Entertainment, he intends to bring the classic and the current in Indian cinema and television, online. In an interview with BW Online’s Alokita Datta, he talks about his plans to showcase Indian media content worldwide, the growing popularity of online movie viewing in India and explains how Spuul’s multi-screen approach, which allows a subscriber to watch a movie across all platforms, will help them make headway in the Indian market.When did you come up with the idea for an online film streaming portal and how do you plan to expand your services? We started Spuul with the idea of doing something to Bollywood’s taste towards the end of 2010; that is when I met up with Sudesh (Iyer, founder of Sony Entertainment Television and co-founder of Spuul) and ran the idea by him. He found it exciting, since it was something they had thought of doing for many years; this is the next evolution of consumer technology where users would want to view digital content through mobile phones and connected televisions. We appointed our first key person, Prakash Ramchandani, who heads our South Asia operations. Our Mumbai office was opened in November last year. In the first year of our business, we spent time talking to different content operators, explaining the business model around it and how it is going to be important because if look at parallel services (to Spuul), Netflix has been around for about 10 years in the US. On a base of around 300 million US residents, Netflix has about 30 million subscribers —they therefore have a 10 per cent penetration in the market. If you look at India, today, there is prominent over the top (OTT) operator who has got substantial penetration into markets, primarily because we are relatively new in the curve of adopting these kinds of services, but we believe that within the next 5-10 years this is going to be one of the most significant ways in which people will consume content. In a market of a billion people, we can foresee a considerable market size. The subscription model is a combination of free streaming and pay per view content. However, there are a couple of websites, such as Filmlinks 4 u and others, which have a wide data base of films that can be accessed for free. How do you wish to set yourself apart through your pricing strategy?The primary difference between what we are offering and what some of the other sites feature is a destination where people can come and watch their content; it is not a redirection service nor is it an aggregation of embedded links. The second differentiation is that we provide a premium service, wherein some content is free and some is paid. We do use advertising to buffer the price a little bit but ultimately we want to encourage customers to sign up for our premium content in the long run because they get tremendous value for it. For less than Rs 250, per month, they get access to over a thousand movies, which are of high quality and can be viewed any time. Moreover, there is no restriction on which platform they can use the service on; they can watch movies on Spuul on their desktops, laptops mobile devices such as iPhone and iPad. We will be releasing our Android product very soon (in February 2013) and we already have our app on Facebook. Today if someone wants to watch films on Facebook, all they have to do is go our Facebook app where people can find all our content available there and will be able to access them in real time even as they chat with their friends. Thus, our objective is to allow users to be able to watch our content in any platform. The striking feature of Spuul is that any subscription you take from one device carries on to other devices as well; for example, if you are watching a film on Spuul through an android device you can use the same account on the iOs, a connected TV or the web. It is not only integrated; it also allows users to continue watching their content from where they last left off, irrespective of the device and platform. Even though the amount you are charging is nominal, don’t you think users (in India) have strong a tendency to gravitate towards free content?It is difficult to compare our content to free content because consumers pay a lot for cable connections and the average price of a movie ticket on multiplex screens is anywhere between Rs 150-400. So it is not as if people are not paying, they are just selective about what they are paying for. We are allowing people to access the whole Spuul library for a very reasonable price. The predictability of going a library and watching content will make a big difference in our case as opposed to finding free content, which may be there one day and probably won’t be the next, in the case of pirated content.Are you focusing primarily on developing products for mobile platforms?Yes we are focusing on mobile but we will be releasing our TV apps as well for Samsung, LG and Google TV as well. The complete Spuul experience will be made available on smart TVs.In a country like India even though broadband connections are widespread, internet speed varies and is contingent on different factors. How do you plan to address this issue when it comes to streaming films on Spuul?The technology we use for movie viewing is called 'adaptive streaming' which in simple terms means that users on a slow connection get a slightly more pixelated video than someone with a better connection. To watch a movie one only needs about 300 kbps which is only about 5-10 per cent of the average 3G connection at the moment. However, we are working on technologies which we hope will allow people to have a larger buffer of the movie so that they can continue to enjoy the movies should the connection be lost for some minutes.What is your strategy behind acquiring and classifying content?Our philosophy about content acquisition is that we want to be a destination for premium content, like I mentioned, and in doing so we segment the market into two categories: one is older classics and the other is new content: from content that has been released in the last 2-3 weeks to those which are about 2-3 years old. This is both for television shows and movies so that people can also enjoy watching the shows and films they enjoyed watching in the past (older television serials such as Malgudi Days, Fauji etc). India produces so much content that there is no one system or provider who can cover all of that, so we are trying to pick and choose the better content. Over the next year we are planning to introduce more vertical content — genre specific content such as devotional, lifestyle— and content which is closer to day and date release. We have done this with a few movies (particularly small budget ones) already where after the film has released in India, Spuul has carried the movies worldwide. We intend to carry day and date releases for television serials as well and will be announcing some new programmes over the next few months. We are also in talks with all the major television channels, and are looking at both archival and new content with a focus on classics and very current programmes. We expect Spuul to become a mainstream medium in the next 5 years, not just because of better Wi-Fi and 3G penetration but also because of access to better content and more platforms.Do you intend to feature only Hindi/Bollywood films?No, we are definitely interested in regional cinema as well. In fact, at the moment we have some regional content in Tamil, Telegu, and Malayalam and Bengali films and in our next batch we plan to add many Tamil films to our library and move towards expanding our collection of non Hindi content. Since you are based in Singapore, does the Indian diaspora constitute a significant percentage off your viewership?Spuul, as a service, is available worldwide and for most of our content we have global rights. If we analyse where are views are coming from, 45 per cent of our users come from India and of the 55 per cent distributed outside India, the US, the UK and the Middle East are big markets. Even with an international audience, we are always going to focus on high quality Indian content. Yes, our aim is to get content that will attract Indians both in and outside India so international award shows such as IIFA fit the bill. We would like to be involved in the Indian entertainment vertical as well. Could you talk about your own involvement with media start ups?I have been involved with start ups since the mid 1990s since when I have launched many, particularly in the technology domain. Over the years I have worked together with the Media Development Authority (MDA) in Singapore which identifies start ups and helps them with funding and therefore provides an opportunity for young start ups to access government grants to kick-start operations. I have been engaged in the incubation process of many such media start ups, either as a mentor or indirectly participating as a venture partner. Over the years I have helped starts ups either build a product or market it, where I combine my passion and expertise. When we started raising money for Accellion, a secure file transfer system launched in 1999, it was at the time of the dot com bust. Valuations were low and for the first round of funding I had t meet about 40-50 VCs before one of them decide d to invest. The investment cycle is cyclical, and I think I have tried to share my learning with a lot of the companies I have worked with. Every year when we do fundraising, we have a slightly different perspective on it. From the time that you started your first enterprise to now with Spuul, how has the process of raising capital changed?I think there have always been good investment houses that look at a product and person and make rational choices. As an entrepreneur it is important to figure out the people who would understand the domain you are operating in and pitch to them directly, as opposed to the others. The big difference between the VCs of today and those of yesterday certainly is that they understand change. During the dot com bust in the early 2000s, one could raise money just on the basis of a business plan. Today the market has matured and VCs are looking not just for a business plan but also an early product around which metrics could be measured. In case of Accellion, a lot of funding came from the US. In the case of Spuul, our big funding rounds will happen in India because that is where most of our customers will come from. I think in the next 12 months we will be doing our rounds of fundraising in India. Is the market ready for digital media companies in India, in your opinion?It is interesting that we are classifies as a digital media company, but if you look deeply at the service we are providing, it is very traditional; it’s the platform that is different. What we are going after is a subset of the market because in terms because the platform is relatively new but if you look at the number of mobile phones (600-700 million)or set top boxes in India they are very large. The way technology is moving today and the market is growing there will be tremendous segment of the population who will consume content through services like Spuul. At the moment India is still a one TV household, whereas many developed countries have multi TV households. However, India is going to be a multi screen household; there may be one TV but many family members have multiple devices. We will skip from being a multi TV household to a multi screen household. And that is where Spuul is very strong.How do you plan to market Spuul in India; are you concentrating on online advertising?We have invested in above the line advertising, some offline and some online. India being an Android dominated market we are waiting for our Android app to be released before be spend money on marketing it to the end consumer. At the moment the major content houses in India know us as well as the television channels and cable companies. But the average consumer doesn’t know much about Spuul today because we don’t have a product ready for them yet. But our Android product will address a large percentage of the population. Therefore, we will be investing in above the advertising, offline (print, radio, Television) primarily since it builds brand awareness. We are keen on digital advertising too and are running a small Google ad words program at the moment as well, besides our presence on Facebook. We also have metrics that measure our return on investment and user acquisition.
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Life insurance contributes 4.1 per cent of GDP and also forms a significant chunk of household savings. In order to boost life insurance, levying of service tax should be revisited in order to make the product attractive. I would like to stress on matters related to service tax and income tax in the life insurance sector.Service TaxRevise Service Tax On FMCOne of the issues that have been recommended earlier as well by life insurers is service tax on fund management charges. At present, fund management charges (FMC) are capped at 1.35 per cent. As recommended by IRDA, service tax is charged on this or the actual amount, whichever is higher. This results in unnecessary payment of tax if the actual FMC is less than 1.35%, especially in the current situation where recent guidelines and competition has forced insurers to reduce FMC. Hence, it is recommended that tax should be charged on the actual amount of the FMC.Nil Service Tax On Annuity Purchase PriceAnother aspect where service tax should be re-looked at is on annuity purchase price. For instance, while purchasing an immediate annuity plan, a service tax of 3.09 per cent is charged on the price. Hence, for a customer purchasing annuity worth Rs 1 crore, the effective purchase price for the customer increases by Rs 3,09,000, which is a significant amount. Considering the reluctance of people towards planning for their retirement through life insurance, this service tax may act as a further deterrent for customers.Review Of Reverse Charge MechanismService tax liability is normally discharged on the provider of the services. In case of Insurance Auxiliary Service it is to be paid by the service receiver (Insurance Company). Under this concept the tax has to be paid on the entire amount without any threshold limit. In case of service provider, threshold level is defined and is currently at Rs. 10 lacs. We feel that a threshold limit of Rs 10 lakh per agent should be considered when the payment is made under the reverse charge by insurance company.Reduce Service Tax Rate For Single PremiumAt present the rate of ST is high in case of 1st year and Single premium payments in case of traditional products. Since the charges/cost for entire life of policy are embedded in the premium and it is equated premium, it is felt that the Service Tax in case of single and 1st year premium should not be at such high rate and it should be same as for year 2.Review Of Point Of TaxationService Tax is to be paid on the receipt of premium on risk part. In many cases the risk portion cannot be determined before underwriting. It leads to incorrect estimation and deposition and adjustments. It is felt that there should be exemption from point of taxation where the value of service is not identifiable. At policy level it leads to number of adjustments and it is administratively difficult for large volume.Review Of Deadlines Paying ST In Case Of Associated EnterprisesDue date for payment of Service tax in case of associated enterprise is the date on which it is credited in the books. Many times entries are posted after banking hours. It is not possible to effect the payment of service tax due on the same day. It leads to unnecessary payment of interest and unjust burden of expenses. We feel that this should be reviewed and in case of associated enterprise the due date for payment of service tax should be 5 days.Income TaxAvoid Double TaxationThe proceeds from an annuity plan also attract a tax deduction. This seems ironical since the corpus out of which the annuity is paid has been built out of the pensioner’s previously taxed income, while he was earning. As a result, it amounts to a double taxation for the pensioner, which seems unfair.Tax Incentive On Pension PlansIn an ageing economy like India, it is critical for one to have a retirement plan. Moreover, in the current scenario, where there is a lack of a social security system, measures to make pension plans more attractive need to be promoted. It is thus suggested to increase the existing limit to Rs 2.5 lakh or more for such pension contributions. This may make pension plans offered by life insurers more attractive, since one of the main motives to purchase insurance remains tax saving. (By V Philip MD & CEO, Bajaj Allianz Life Insurance )
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Those in the publishing industry are aware that India is among the top 10 publishing countries in the world. Going by the India office of the ISBN agency, we have over 12,000 publishers. Add to that a bunch of unregistered publishers, and we have at least 18,000 publishers producing in excess of 80,000 titles a year, of which more than 18,000 are English titles. This, interestingly, makes India the world’s third largest publishing country for English language titles, next to the UK and the US. A quick scan of Nielsen’s report on the top selling English books (in December 2012) throws up some interesting facts: Of the top 1,000 books sold in retail across India, 188 were classified as children’s books (fiction, non-fiction, etc.) led by Diary Of A Wimpy Kid! Of these, 188, 47 were ‘Indian’, calling for celebrations. But that is only if you consider Wren & Martin ‘Indian’! Without the ‘Indians of foreign origin’, the list drops to 33 or so! Out of these, more than 20 per cent are from Amar Chitra Katha (ACK). In November 2012, 183 books for children made it to the top 1,000. And ‘Indian’ books were 43 of these. And ACK publications typically contribute 20 per cent of the kids reading genre month on month. The big question that really seeks to be answered: What are kids reading nowadays? For all who believe that ACK is all about mythology, here’s the ‘doosra’: Fables (including folk tales) is the publication’s largest selling genre, with stories from Panchtantra, Jataka and Hitopadesha, and other folk tales. This is roughly about 25 per cent of the retail sales. Mythology, popularly believed to be ACK’s core strength by parents, is also the second largest genre in terms of sales. Other best selling collections from ACK include ‘Nation Builders’ , ‘Mahabharata’, and ‘The Complete Collection’, which is a collection of 300 Amar Chitra Katha’s packed into one beautiful box. As a recent seminar at the University of Baroda, we ‘educators’ were exchanging notes. At least two doctoral dissertations support our sales pattern (Rachana Bhangaokar, PhD, Assistant Professor, Department of Human Development and Family Studies and Maharaj Sayajirao, University of Baroda). The reasons were similar to the ones volunteered by our customers — uni-variate stories and clear take-outs are the reason why books on fables (Aesop is of course an integral part of the world community of fables). My colleagues at other quality publishing houses would probably support this hypothesis and report similar sales patterns. Why are fables our largest genre? One reason is that our core readership is between 8-12 years old. Children in this age group are getting into the stage where reading becomes a choice beyond ‘activity’ books. Because the classical and much loved ‘grandmothers tales’ find content from a lot of these stories, and as you know, the comfort of familiarity is very important. The reading pattern changes with older kids moving on to Mythology and/or History. Fables pass the baton to Mythology and History. Kids start (or should start) making inferences on ‘right and wrong’, ‘good and bad’ based on what they have learnt in their fables. Some kids drop out of reading other comics after the first two or so years of reading, however, the ‘loyals’ will convert to other genres. Within the ‘older child’ genres, Heroic and fun characters quickly gain precedence. I quote from data based on responses from kids who applied for the Amar Chitra Katha scholarship, run in conjunction with Big Bazaar and which generated >25,000 entries. The primary question was: who is your favourite Amar Chitra Katha character? And the top 4 characters: Birbal, Raman of Tenali, Hanuman and Krishna. I was impressed by the intrinsic ‘wit’ in the answers. Perhaps it’s a sign of the times that Human Wit is valued over super natural powers… especially in a specific segment of the population. What fuels a child to read a story book? A familiar eco-system, Characters or stories that s/he has heard about from her/his significant others, A familiar storyline, for instance, victory of good over evil, triumph of intelligence over foolishness, foolishness is not ‘bad’… in fact, it is loveable, bravery over cowardice, conquering adversities to achieve good (Soordas was blind…) The data on the popularity of fables and characters supports the ‘FSBT’ theory. This is a theory that I presented at a seminar held at Baroda University. Simply put, give the child a choice and s/he will chose familiar, simple, byte-sized stories with clear takeaways. This ‘FSBT’ principle was already known to the people who developed the collections of stories that make up Indian Folk Tales through the centuries. Uncle Pai or Anant Pai who created ACK in the 1960s followed this to the hilt; Walt Disney created an entire world on this principle; and all ‘knowledge-based’ TV channels (Discovery Channel, National Geographic Channel, etc.) seem to follow the same principle when creating programming for kids. Pratham Books use familiar storylines to create inexpensive and beautifully art-worked books for the mass audience. I quote from their website: “…and we believe they should have stories set in surroundings familiar to them and in a language close to their culture…”. So, for instance, you will find children dressed in Indian attires, or games or food found in local setting in the story books published by Pratham. Uncle Pai’s other great creation, Tinkle, is arguably the largest selling magazine for kids in the country with 2.25 lakh-plus copies being sold every month. The probable reason for its success: The clumsy but loveable Suppandi who takes everything literally (thus marking the difference between literal and figurative) and the animal-fearing Shikhari Shambhu — who personifies all the fears that kids themselves will want to share and overcome. Chandamama from Delhi Press is a publication that simplifies life. Simple pictures and uncluttered pages make it popular with the masses as does its low price. There are hundreds of other publishers producing children’s products, but seldom, if ever, make it to the Top 1,000. The key here seems to be the development and ownership of a scalable and specific intellectual property, a la Suppandi, Shambhu and Chacha Chaudhry. The publishers are trying to create books that would compel people to read more. Perhaps we are still lacking in our marketing efforts. We must have our core general products worked out to sustain the bread and butter of each business, with half a dozen best sellers providing the cream. Pricing continues to be an area of concern. Any lower and there is no sustainability in the business; a little higher and books go out of reach of the massive majority. The hunt for the sweet spot continues… Mohan is COO with ACK Mediabusinessworldbooks (at) gmail (dot) comFollow us on Twitter @booksbw
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Indian shopping is finally moving online, and the trend is here to stay. So proves a report on the online shopping trends revealed by Google India on 28 January, by combining consumer interest observed on Google search and online research conducted by TNS. The study also shows that the existent users are satisfied with their online experience, with 90 per cent online shoppers claiming that they plan to buy more products online. As per the study, there was a 128 per cent growth in consumer interest in 2012. Rajan Anandan, VP & Managing Director of Google India, said: “With approximately 8 million Indians shopping online in 2012, online shopping industry in India is growing rapidly and will continue to see exponential growth.”The report was compiled by combining data from Google Trends and online research conducted by TNS Australia with a sample size of 800 respondents on behalf of Google India in November 2012.The apparel and accessories category has risen to the top by becoming second largest product category in terms of consumer interest in the country with 30 per cent of total market interest, after electronics which holds 34 per cent of the market. The report showed that in terms of product categories, this is the one to watch out for, since it is expected to overtake electronics in 2013.In terms of the top product categories ever purchased online, apparels and accessories was the top category with 84 per cent, followed by electronics at 71 per cent. The frequency of purchase was higher for categories like apparels and accessories at 34 per cent and beauty and personal care at 33 per cent, making it more profitable because of repeat purchase. Other categories that Indians searched for online in 2012 were Books, Beauty & Personal Care, Home and furnishing, Baby products and Healthcare. Home & furnishing and healthcare saw their growth double, and were the fastest growing categories in terms of query volume on Google search.Says Anandan, “We expect the growth to come from outside of top 8 metros as was evident in our recently concluded “Great Online Shopping Festival” which saw over 51 % of traffic from non-metros.” Non-metros seem to be fuelling the growth of online, with states like UP, West Bengal, Punjab, Rajasthan, Andhra Pradesh, Bihar, Tamil Nadu and Jharkhand showing considerable online activity.As mentioned by Anandan, the tremendous growth of online shopping in small towns and cities is not counter intuitive, since these areas do not always have access to regularly updated stock as compared to metros. The online portal provides these unavailable products to their doorsteps, often at discounted prices.The report found a correlation between online ticketing and online shopping, with online ticket buyers being more comfortable with the online portal for transactions, thereby having a tendency to shop online. Besides having a higher average amount spent on their first product purchased of INR 2347, as compared to INR 1626 for other internet shoppers, online ticket buyers are more comfortable with the use of debit and credit cards, as opposed to cash on delivery.
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Nagarajan Balanaga holds a Bachelors degree in mechanical engineering, but he preferred to do his masters in Human Resources after he was convinced that most engineers don't innovate and end up as managers. And now as Vice President, Human Resource, Cummins Group in India, he is changing the organisational environment of Cummins, a $18-billion global corporation, in India. But the engineer in him comes out when he says one of the first things he would like to change is to gain efficiency by moving away from manual and stand alone processes to integrated automated processes. And yes, he wishes there would be a change in the mindset of HR professionals from being a support function to leading the business. Excerpts: What made you choose HR as a profession?I hold a Bachelors degree in mechanical engineering. After studying 24 different subjects in mechanical engineering, I was left confused on the subject that could be pursued further. Through my interactions with seniors it had become evident to me that in the industry, engineers have less than a 10 per cent chance of driving any invention or design and that most engineers are really managing people. If that was the case, I felt why not pursue HR as I could have a greater impact on people. It was then that I completed my Master’s degree in Human Resources and crafted my career in this field. What has been the biggest achievement of your career?As a youngster my ambition was to simply become a “‘manager’” in a decent company. Over the years, instead of aiming for the BIG achievement, I have continued to cherish the many small achievements in my career. For instance, a decade ago, as the HR Director at 35, leading the HR operational excellence work for 25 odd countries felt like an achievement to me. Today, my biggest achievement comes from seeing my team flourish in their career. So does being a part of the leadership team that creates HR strategies for an the $18-billion global corporation such as Cummins. Changing the organisational environment of Cummins in India, and being selected to be a part of the Executive Team of 25 (out of 40,000 employees) gives me a sense of purpose.What are the steps a company should take to develop and motivate future leaders?It is imperative to have the right set of leaders across levels who will lead employees towards realising the vision of the company. Leadership development should not be left to consultants. Senior leaders in the organisation must exhibit personal commitment to nurture leaders and drive leadership culture by deeply and consistently engaging with their employees. It is important to make budding leaders understand that they need to optimise for the Company and not for themselves. We have a 24-month programme where the chairman and the global HR leader engage with each participant of the executive development programme, and set similar expectations on the other senior leaders to replicate the system at next levels. Since leadership is like an ocean, one has to pick certain aspects and adhere to it. Cummins has identified ‘high performance team approach’ and five critical leadership skills essential to great leadership. These are: coaching and development, talent management, fostering open communication, diversity management and strategic thinking/ setting the aim. Besides, companies should approach leadership development at multiple levels, as it is equally important at entry, middle and senior leadership levels. Community project is an area which can be leveraged to develop tremendous leadership skills. How do you retain talent in your company?We believe right environment is a key to employee retention. As our former chairman Tim Solso said: “It is all about good bosses and meaningful work”. It is crucial to balance multiple elements of the organisation’s eco system to create the right environment that helps people realise their career dreams and feel good about what they have contributed to the organisation, everyday. At Cummins, we have devised a ‘Great Place to Work’ strategy which focuses on nine elements that drive employee engagement. Having said this, some amount of attrition is good for the company. Every year while a company recruits 15-20 per cent new hires, it helps to lose a small number of employees who fail to align with the organisation’s culture and values. What sets your company apart from other companies as far as work culture goes?Cummins Inc. is a 93-year old global organisation that is built on a strong foundation of values. We spend a lot of time in ensuring that our new hires understand, align and appreciate these values. The six core values are integrity, innovation, delivering superior results, corporate responsibility, diversity and global involvement.Our ethics governance infrastructure is very strong and tolerance levels for violations are zero, irrespective of levels and seniority. This drives better treatment of each other at work. We embraced diversity at a very early stage in our journey and strongly believe that it is a competitive advantage for us. Our hire to develop culture, wherein we encourage significant job rotations across businesses, six sigma, corporate responsibility and performance ethic sets us apart from others in the industry. What is the biggest challenge you face when selecting people?We look at hiring people with high ethical standards and who demonstrate the six core values and personality traits that define and form the backbone of our organisation. Many a times, our external environment does not subscribe to all that we believe in and we therefore struggle to find people at managerial levels who can readily hit the ground running on the very first day. These individuals need to be groomed to embrace Cummins’ standards in terms of values. How do you track employees' satisfaction or dissatisfaction in your company?Cummins has instituted the Employee Satisfaction/Engagement Survey for tracking employee’s engagement levels. The survey includes behavioral based questions that indicate an employee’s level of engagement/satisfaction with the company. Conducting the survey globally and having an employee engagement index allows us to compare the level of engagement across business units, regions and functions as well as benchmarking our overall level of engagement with other organisations. Subsequently, every business unit/function develops a specific action plan. In addition to the engagement survey, forums like ‘meet the leader’, ‘focused group discussions’, ‘one- on-one interactions’ etc. have also helped us gauge employee satisfaction levels. How important is HR to the bottom line of a company?I feel this question is more appropriate for CEOs. I would say HR is one of the most critical functions to creating, running and sustaining a successful organization. The benefit is realised when the business leader is passionate about the function and the HR leader is capable and committed to drive appropriate initiatives, which help the organisation grow successfully. If not, then it will not work. I am fortunate to have always had leaders who understood the importance of HR and empowered me to help the organisation succeed. How should HR be integrated with the core line of business?Primarily, each HR leader has to think as a business leader first and understand the business well. The second important change in the mindset for any HR professional is to start thinking that they are not merely a ‘support’ function. In fact, they are the ones who have to lead the business through their strategic initiatives and make way for the future. But unfortunately, many HR professionals enjoy playing the second fiddle, waiting for the business to invite them for meetings or solicit their advice or help. They don’t demand their spot for strategy discussions. They are happy to receive a strategy document to start thinking about how they can offer HR support. This has to change. Even the business leaders should probe and engage with the HR partners at a drawing board stage. Having said that, where the HR employees are a thoughtful group and have the passion to add value, there are umpteen situations where the business can pull them to derive value. A recent survey has questioned HR's actual contribution in an organisation. Would you like to comment on it with particular reference to your organisation?I am not fully aware of the details of the survey so I will restrict my comments to HR in Cummins. In our organisation, several culture changes have been influenced by initiatives led by HR. Some examples being; creating an eco system to improve professional employee retention from 80 per cent to 90 per cent levels, embracing diversity, improving women representation from mere 4 per cent in 2004 to 26 per cent in 2012, and improving satisfaction levels through multiple 'Great Place to Work' initiatives. We create and manage the infrastructure to hire right talent at the right time. HR leads all these initiatives in partnership with the business. If you could change three things about HR practices, what would they be?Gain efficiency by moving away from manual and stand alone processes to integrated automated processesSimplify processes and reduce bureaucracyIndustry approach to contract labour From HR professionals perspective: Change the mindset from being a support function to leading the business Sustain the energy of self and the team to run Marathon versus SprintSpend major chunk of one’s time in thinking about ways of adding value to the business
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Back in 2007 Main Street had never heard of Lehman Brothers. Greek government bond yields were comparable to Germany’s, and Italy’s state debt relative to GDP was at a historical low. Kodak reported a profit of $676 million and Facebook had only 50 million members. Consumer confidence ratings in the US and Europe were at their peak. Looking back, two conclusions can be drawn. Firstly, we are still lousy at predictions. Secondly, in an ever more volatile, uncertain, complex and ambiguous (VUCA) world, business success will increasingly depend on being able to respond rapidly to change. With many economies experiencing a double-dip recession, this will remain the case in 2013. The bumpy ride during these last five years has brought both pleasant and unpleasant surprises for firms, leaving their Chief Marketing Officers (CMOs) to struggle with many demand shocks and unanticipated customer behavior. Shocks, especially in demand, are best managed when information is communicated accurately and in a timely fashion throughout an organization, and preferably an entire supply chain. Something easier said than done. Being responsible for strategic marketing, a role that goes beyond PR and communications, CMOs or CCOs (Chief Customer Officers) take the lead in understanding, co-creating, delivering and communicating value to customers.1 Anticipating changes and shocks in customer needs and behaviors is obviously one of their top priorities. To find out how CMOs deal with uncertainty and how to create growth opportunities for a challenging 2013, IMD joined the CMO Circle Conference to talk with CMOs of prominent brands in a wide range of industries about their current challenges. Their current marketing issues seem to fall into three categories: ReactInfluenceAnticipate ReactTo quote Jack Welch, the former head of GE: “When the rate of change outside exceeds the rate of change inside, the end is in sight.” For the CMO of a major international insurance company, a flexible structure and a culture of agility are the keys to success. This CMO focuses on going back to basics and putting the customer at the center of all business processes. This means enhancing emotional connections with customers by cultivating a genuinely caring attitude in all employees. Similarly, the CMO from a leading manufacturing company has worked on making this firm more customer-focused by drawing on customer insight along the entire value chain and touch-points. Using the net promoter score (NPS) methodology, a client loyalty metric, he set up a marketing information system to analyze the complex buying centers at customer sites and aggregate the data to guide strategic decision-making. The “react” strategy also requires identifying changing patterns early and leveraging the vast informational resources available within firms. For the executive of a leading IT and software provider: “Our role is also about knowing how to deal effectively with the data explosion and social media opportunities. This means a stronger say in all of the marketing Ps, and not only the P of Promotion.” Another player in the same industry sees opportunities for top marketers in the speed at which data and information is generated and disseminated. For him, “Real-time insights now, with 80 per cent accuracy, are more important than 100% accuracy in three months’ time.” InfluenceInfluencing consumer demand and creating a following of fans and friends is another key strategy. It relates to the core of marketing strategies -- differentiating the value proposition and reinforcing the brand. A marketing executive in the fast-moving consumer goods industry warns that technological advances should not distract marketers from the basics: “We are in danger of losing perspective and focusing on the newest shiny but less important things in our quest for modern marketing… Next to going ‘back to basics’ it’s about ‘going social.’ Not only by really embracing social media, but also by being more social and purposeful as a brand… Sociable marketing is the way to build strong brands and business in the future,” he says. AnticipateEven in a VUCA world anticipation can be strategically valid, providing that it is done at the right level. CMOs must pay attention to all major trends shaping the business world (demographics, communications technology, social and economic trends, etc). Since demographic change is one of the key drivers of every business, firms and CMOs alike should anticipate their position in respect to an ageing population, more single households, health and wellness growing, one billion consumers in emerging markets and polarization in consumer choices between the “best” and the “cheapest,” especially in developed economies. CMOs also need to develop their answers to the predictable and bigger macroeconomic questions. ConclusionThe three categories—“react,” “influence” and “anticipate”—are not necessarily mutually exclusive. While short-term imperatives may require a strong focus on one, a long-term perspective may force marketers to play with another and manage a dual approach. Each strategy requires enlarging the mandate of CMOs beyond a constrained set of responsibilities (such as PR and communications). Fortunately, it looks like the potential of CMOs is being unlocked. Spencer Stuart’s recent report shows that average CMO tenure has risen to 43 months (up from 23.2 in 2006), although it remains shorter than for others in the boardroom. Although the panelists’ strategies vary depending on their industry and environment, their mindsets are interestingly similar. They all see change as a great opportunity, also for 2013 and beyond. Many agree that marketers and CMOs tend to look on the bright side and always see the glass as half-full. It is the ‘nature of the beast.’ (Dominique Turpin is the Nestlé Professor and President of IMD. Willem Smit is Adjunct Professor at Singapore Management University, and chair of the European CMO Circle Conference)
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Nowadays everyone thinks teamwork is an essential part of management. Who would question its importance in running any business? The image of an all-powerful boss making the big decisions all by himself is fast becoming a thing of the past.Or is it? Not when it comes to top-level management. There the idea of true teamwork is more dream than reality. Even if it thrives at other levels of a business, it rarely does there.A study I recently conducted of companies of many sizes and in many industries found that only 6 per cent of them had top management teams truly mobilised to make big decisions. No less than 21 per cent were run by chief executives who generally made decisions entirely on their own.Most of the companies, 73 per cent, had top managers/directors that worked as groups but fell short of qualifying as teams. That is, they functioned as collections of diverse people who came together in agreement, but what they agreed on was accepting the decisions of the CEO. They weren't teams that came up with their own recommendations.Bosses, for their part, tended to think that consulting consultation with the team would help motivate and reassure the top managers/directors, but it wasn't a big part of developing strategy. They ask their top management directors questions and then made their decisions on their own. Why? Because they think that's their job as CEO.That doesn't make for a very democratic picture of top management. It looks a lot like bosses just surround themselves with yes men. Very often CEOs choose their top management based more on personal affinity than on the managers/directors' specific skills or responsibilities. That sometimes leads to situations that are almost surreal. For example, a CEO whose personally closest colleague is the financial director will be more likely to discuss human resources questions with him than with the H.R. director. He'll be asking the right questions, but not necessarily of the right person.How does a CEO portray himself as a big fan of teamwork while maintaining a management team/board of yes men? By dividing to conquer. In one of the companies we analysed, the CEO had no fewer than 19 high-level colleagues on his top management staff. That would make real teamwork impossible. The size of the group would even make meetings rare, and when they did happen their sole purpose would be to circulate information. Yet having so many directors makes the boss look like he manages based on wide consultation. In truth, the more directors there are, the less more likely the CEO is to be able to keep a personal hold on the company.In the most extreme cases, you find top managers/directors with no freedom and autonomy whatever. At one of the firms we analyzed a new CEO came on board and found that some of the managers had never made any decisions. They hadn't even known they had budgets they were responsible for.A change of CEO like that can present a big opportunity for examining how the top management works. Generally, the way they function is more a reflection of the CEO's personality and managerial beliefs than of anything else.We were surprised to find that this state of affairs in every kind of organization, large and small. Not only in multinationals is teamwork among directors rare. That's also the case in non-governmental organisations and small and medium enterprises.When we asked CEOs about this, most of them revealed that teamwork wasn't second nature for them. Some of them had chosen to pursue it, seeing it as a plus for their companies. More may have to. If, as some have argued, the future belongs to businesses that are more participative and democratic, then maybe the days of the all-powerful CEO are finally numbered.(Céline Legrand is a member of the human resource management faculty at Audencia Nantes School of Management, in France)
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Tata Housing CEO and MD Brotin Banerjee writes about the expectations of the real estate sector from the Union Budget 2013-14Fiscal policy Given that residential property prices have been rising steadily across cities, demand for real estate has slumped. The real estate sector was expecting a cut in interest rates in both Q2 and Q3 (2012-13), but the RBI has kept the repo rate (short-term lending rate) unchanged since April 2012. Falling demand for housing from consumers, coupled with tight monetary measures has led to liquidity crunch for developers. In order to provide a fillip to developers and consumers, it will be necessary to bring about monetary policy changes by bringing down the repo rate and easing credit policy.Mandated bank support for project development is required to ensure timely completion of projects. Tax measures such as increasing the limit of interest deduction on home loans from Rs 1.5 lakh to Rs 3 lakh will provide necessary motivation to consumers to increase buying activity and revive demand. Raising the income tax exemption limit to Rs 3 lakh will lead to more disposable income available for domestic investments. Increase in service tax and excise duty by 2 per cent in the last budget has put pressure on project costs raising the unit costs by 4 per cent-5 per cent. As a result, high cost of construction has impacted demand and is proving to be a deterrent for both sides. To revive demand and control rising property prices, government should consider lowering of service tax and excise duty. In addition, residential construction should be taken out of service tax net to cover builders and developers who are registered and paying service tax under the ‘works contract service’.Regulatory Reforms It has been a long-standing demand of the real estate sector to be granted ‘Industry Status’. This will help the sector become better-organised and increase accountability. It will also help the sector access bank lending at average interest rates with low collateral as against high risk rates offered at present for construction projects. Easier financing options will help bring down home prices which will be hugely beneficial to consumers and help address the urban housing shortage in the country. Another recommendation would be the establishment of a single-window clearance for construction projects to ensure timely completion and avoid cost overruns. Construction costs are affected by multiple levels of approvals and uncertain time required for clearances. As a result, both consumers and developers bear the brunt, with developers unable to complete projects on time and delayed possession for consumers waiting. Affordable Housing Affordable housing will continue to have priority as the urban housing shortage is estimated at 18.78 million households in 2012 in the EWS and LIG segment. Union Budget 2013-14 should provide SOPs and tax rebates for affordable housing projects along with interest subvention of 5 per cent for the LIG and EWS category. Extension of scheme of interest subvention of 1 per cent on housing loan up to Rs 15 lakh on homes costing up to Rs 25 lakh should be continued. Excise duty reduction on cement and steel to lower project costs and expansion of the interest subsidy on loans will prove to be necessary tools to boost developers’ interest in the affordable housing segment. The announcement of allowing ECB for affordable housing projects was a welcome move. The revised criteria will ease the financial crunch of the industry and make funding more accessible for developers and Housing Finance Companies (HFCs). The inclusion of slum rehabilitation projects will address the need for better urban planning in our sprawling cities. The government should also consider conferring infrastructure status to such projects. This will enable developers to access priority bank loans at lower interest rates mandated for infrastructure projects.
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