Businesses and threats - parallels with animal behaviour

You're driving down an unlit road on a moonlit night. Suddenly, a fox jumps out and is caught in the beams of your headlights. What happens? Typically, the animal just freezes for a few seconds, then it starts running along the road just a bit ahead of you. Once it figures that it can't outrun your car, it jumps out of the road, and presumably breathes a sigh of relief at its escape from the strange monster.

Sometimes companies behave in the same way while facing a totally unforeseen crisis. First comes the freeze, while the magnitude of the crisis and estimation of disaster and damage takes place, while the crisis looms even closer. While this is happening, things go on as usual, perhaps in the hope that the crisis will pass, it isn't a real threat to business, there'll be a solution round the corner, etc.

An good illustration is the Blackberry story. In 2009, it was the second most popular phone after Nokia (and that's another story) and now it's consigned to history. The hyperlinked article mentions that Blackberry launched a modern touchscreen phone in 2010, three years after the iPhone came on the market. Death freeze!

What do we do when we're about to be hit? We make ourselves as small as possible so that the area of impact is lessened - the passenger manual on any aircraft advises us adopt the brace position when an aircraft is required to make an emergency landing on land or on water, making us as small as possible in the seat.

A company 'sizes down' when it's survival is threatened. Not only does it shed people; it sheds activities that are non-essential to its survival. It sells of non-core businesses, it keeps only its cash-cows. If product and/or process innovations are key in its business, it will run a R&D effort as best as possible - in any case, most of its best talent will find greener pastures.

I'm curious to find other such examples of parallel patterns of behaviour, and not just in response to threats, so right now, Google search beckons. 

Hierarchy of needs for a business - some thoughts

Milton Friedman famously said, “There is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” 

Leaving aside those businesses which do not engage in open and free competition and do indulge in deception and/or fraud, and who prefer to play outside the rules of the game, this quote has created somewhat of a philosophical divide between two types of businesses - those who believe that their only responsibility is towards its shareholders, and those who believe that their responsibilities extend towards a larger public of stakeholders as well. 

A good Indian example of the latter philosophy is the Tata Group, which publicly states that: "At the Tata group we are committed to improving the quality of life of the communities we serve. We do this by striving for leadership and global competitiveness in the business sectors in which we operate. Our practice of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. We are committed to protecting this heritage of leadership with trust through the manner in which we conduct our business."

Does this kind of bipolarity reflect in the hierarchy of needs proposed in my last post? It can be argued that at the basic level of need - resources for survival - the most important stakeholder is the shareholders. All the other stakeholders - employees, vendors, customers, etc - are all via media to ensure survival. The importance of the community and society are not of a high order, since most surpluses generated need, necessarily, to be routed to the survival and health of the business. 

However, at the same time, satisfying the needs of employees, vendors, and customers are paramount to the survival, and most of such needs are legally protected. Hence, even at this basis level, a business has to operate with a stakeholder approach. 

In the context of the discussions on CSR over the last decade and a half, it can be seen that it is only from the second level of need - resources for growth - that CSR becomes meaningful and practicable. It is only from this stage onward that shareholders are likely to agree to forego some significant surplus to be given back to society, instead of being paid out as dividend. 

Of course, there are and will always be businesses, who play within the rules of the game as they interpret them. Some of their actions are quite harmful for their reputations - as this article and this one about Walmart tend to show. 

Fundamentally, however, it is likely that the owners of a business come with a belief in one of the two contending philosophies, and once the business is stable and growing, stakeholders other than the shareholders become important determinants on strategies and actions. 

Is there a Maslow's hierarchy of needs for a business?

Maslow's hierarchy of needs is one of the fundamental precepts in psychology and is ubiquitous in the world of business, marketing, human resource management, and elsewhere. We use it everyday of our lives and the pyramid below needs no explanation.

[Source: https://en.wikipedia.org/wiki/Abraham_Maslow]

If we examine a business over a period of time, one can make the case that there exists a similar hierarchy of needs applicable to a business. So, let's build such a hierarchy for a business.

At the bottom of the pyramid comes the need for survival - threshold level resources that ensures that the company keeps going. Since survival is not enough for most businesses, and the need to grow is paramount for the owners and other stakeholders, the second level of the hierarchy could be 'growth'.

After a while, a business seeks recognition and a feeling of belongingness in the area of business in which it operates. This is natural; when a company is born, the market and its competitors look at it with some degree of suspicion about its longevity, unless it brings some highly differentiated product and/or technology offering which carries the threat of upsetting the hitherto comfortable apple cart of the business domain. After some years of consistent growth and success, the business is now an accepted member of the space, and it seeks 'membership' of the business world. Ad and marketing communication agencies want to win awards; companies want membership of their respective trade associations, and to attend association meetings and network with their peers.

The next tier is respect. Businesses want to earn respect and want the world to show this respect. It can take various forms - talented people want to work for it; customers want to work with it; company leaders are voted to leadership positions in trade associations; the company is expected to set the tone in conversations about the industry, the market and other such matters. CSR starts to become an important strategy at this stage.

At the summit of the hierarchy is the tier I've called 'statesmanship'. The company has the resources to do things not directly or even indirectly affecting its state of health. CSR activities gather higher momentum and cover a larger canvas of operations. Company leaders start working with governments on issues which do not limited to its areas of businesses; the business commits resources to enhance skills and knowledge not purely for its own consumption.

Hence, the skeletal hierarchy could be depicted as below:



I've called it 'skeletal' since right now, it's just an idea - interesting, but untested, unproven, and it might not even be new!

I'd love to have readers send their opinions, constructive or destructive, examples of such descriptions from published sources, etc; I'd really love to learn in this area.

You must buy the Tata Tiago - Lio says so. Or else!

Imagine this about 3 decades ago - a typical ad agency brainstorming session. It is eleven o'clock at night, and outside it's raining like it only can in the Bombay monsoons. The meeting room is filled with leftovers of a samosa, Maggi noodles dinner and somewhat bedraggled account exec and creative types who'll get passed over by any fastidious cat. The ashtrays are filled to overflowing. The glasses and the bottle of Old Monk are all empty. Nobody has any money to go any buy another OM, and in any case the booze shops are all closed. And worst of all, we're supposed to present ads to the Bossman tomorrow morning, and there's nothing to show - nothing at all worth a d***.

That's when our Creative Director would open up and speak those golden words of wisdom which have resounded in the offices of ad agencies since the days of Pompeii: "Let's put a really pretty bimbo in the ad, and the client will love it. Make sure that she shows a lot of thorax, chest and midriff and we'll get approval."

Sex sells. Right.

Decades have passed, and the bright minds of Indian advertising have found something else that sells even better.

Celebrities.

I can imagine the conversation happening in the ad agency at another eleven o'clock at night brainstorm meeting. Of course, no ciggies, no Old Monk in the conference room. Now the CD says, "Stick in some celebrity mugshot in there, and we'll get approval."

In a seminar some months ago, a highly respected Professor of Marketing in one of the top business schools in the US gently hinted at his sense of surprise at the popularity of celebrity advertising in India; in his view, no other market uses celebrity advertising as much as India. One can easily believe it - we need Amitabh Bachchan, Sachin Tendulkar, and other assorted film, TV and sports stars to sell us anything from flipflops to payment banks to travel booking sites and shopping sites, etc.

Is it because Indian consumers really believe that celebrity endorsement means that the product is a better, more reliable product? That Salman Khan actually uses Bahamas flipflops? Maybe they do - going through a few hundred assignments from MBA students over the years have convinced me that the writers of such assignments really believe that celebrities bring credibility.

So, all the things we were taught about the vampire effect, and matching brand values with those of the celebrity are perhaps old hat. Perhaps, sticking a celebrity into the ad is a hidden confession of the lack of ability to think of a strong creative idea, and hence an easy escape route.

So, the idea is that when the finest footballer in the world, Lionel Messi, exhorts us to rush out and shell out Rs 4 lakhs for the Tata Tiago, we should be doing just that. Maybe the Tata guys are right - according to this, Tata Motors received over 1 lakh enquiries for new Tiago by mid April. Sales were perhaps not as spectacular, if this is to be believed, but it's early days yet.

Tata Motors receives over 1 lakh enquiries for new Tiago

Read more at:
http://economictimes.indiatimes.com/articleshow/51877959.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Tata Motors receives over 1 lakh enquiries for new Tiago

Read more at:
http://economictimes.indiatimes.com/articleshow/51877959.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Or is it just fanciful thinking? Car buyers in the Tiago category may not care at all about Lio or any other celebrity endorsement, but are more concerned over mundane matters like "Kitne deti hai?"

I've tried to get stats from my friends in market research about the role that celebrity endorsement plays in advertising and the specific areas of influencing consumer behaviour, but no success - their data is of course for privileged access only. Perhaps a reader of this post may wish to point me to some data which is in the public domain and does address this question.

A question of ROI

Makar Sankranti 2016 is just done and dusted. Pongal and Bihu is over. And soon we can look forward with eager anticipation to being regaled by a genre of stories which hit our media every spring and summer - large-scale cheating in school and college exams. For those with short memories, here's one such happening from March 2015.

For those who believe that this is a peculiarly Indian behavioural trait, or at best a third-world phenomenon, please be prepared to be corrected. It's pretty common in Stanford too. Yep, that's right - Stanford. Here's proof that I'm not hallucinating - check this out. And no, it isn't limited to Stanford - it appears to be pretty widespread - see here.

Since cheating appears to be a universal, and universally appealing phenomenon, my curiosity was aroused and I did some Google research as to why cheating is so widespread. I finally came to the conclusion that it's all a question of ROI - return on investment - and hence purely economic.

Let me explain. A child needs to pass in school in order to get into college. A college degree is essential in order to get a job. A job is essential for livelihood, marriage, etc. etc. Hence the economic connection is clearly demonstrated. QED.

Economics also tells us that risk and return are directly proportional - the higher the reward, the higher is the willingness and propensity to take risks. However, time has shown us that at the highest levels of reward, there is precious little risk. We just need to look at what happened to Wall Street and global banks in the 2007/8 meltdown. They burnt up billions of dollars, bringing global economics to the brink of collapse through what can only be described as chicanery and fraud. But they got saved by taxpayers' money. And not a single executive went to jail for even a single day.

There's a lesson here for all of us - if you must cheat, cheat big, really big. Then the government will step in and save you. Amen.

Branding in the digital age - the merits of riding a tiger

First off, let me confess that I'm 64 and, therefore, a real real late-comer into the digital age. Thanks to pressure from my students, my son and his peers, and the countless nephews and nieces that I'm blessed with, I decided to jump into the deep end of the digital age and got myself accounts in Facebook, LinkedIn and Twitter, the last of which I've since discontinued.

What took me by surprise was not the behaviour that I noticed on such "social" media spaces, but in the e-commerce and m-commerce spaces. I would have sworn that we Indians would never buy clothes and shoes without going through our 'touch-feel-see' and 'trial' routines - but thankfully I had not taken any vows about it, since I would have to eat crow, and large quantities of that indigestible bird.

On closer study over the last few years, I noticed some significant changes in the way consumers, particularly young consumers in India, interact with offerings, messages and brands. This has significant impact in the way marketers need to go about creating strategies and tactical plans in order to bring their brands emotionally and physically closer to their consumers.

A New Paradigm

Changes we've seen can perhaps define a new paradigm in consumer behaviour, but let's go ahead without caveat:

1. The consumer today has far more choices than she had in the past. That's of course a given, but it also means that power is now more assuredly in the hands of the people, and not in the hands of the manufacturers and/or channels. 
2. The consumer today can and does bite back, and hard. Had a bad holiday experience? You will go onto FB and create a shindig. The product you bought off Amazon is not up to your expectations? Sure you'll yell and scream - and you'll get heard too. 
3. Consumers are learning faster than ever, and much of their learnings come from other consumers. So, you don't just have to satisfy one consumer but a whole community. Word-of-mouth has never been so powerful.
4. The consumer's attention span has become shorter in most cases. If you want to tell her something, make it quick, fast and straight. But, you can't be boring - you must engage, entertain, excite her at the same time. "Buy me because I last longer" is still a good message, but now you must prove it in a fun way. Exhortation has to give way to excitement. 
5. At the same time, the consumer is prepared to spend more time in search, evaluation, and post-purchase validation. In an article entitled "Branding in the Digital Age: You’re Spending Your Money in All the Wrong Places", the author writes "In the June 2009 issue of McKinsey Quarterly, my colleague David Court and three coauthors introduced a more nuanced view of how consumers engage with brands: the “consumer decision journey” (CDJ)...Their research revealed that far from systematically narrowing their choices, today’s consumers take a much more iterative and less reductive journey of four stages: consider, evaluate, buy, and enjoy, advocate, bond." An interesting sidelight was that consumers today spend a lot more time in the post-purchase stage than they did earlier. 
6. Consumers' relationships with brands can fracture quicker than ever, but if cemented strongly can last for much longer - in other words, the marketer can move the consumer to such a stage of satisfaction that she can become an advocate and brand ambassador. Here, I don't mean 'likes' in an FB page, which is a meaningless word in that context and totally without validation. What I do mean are consumer feedback without incentives, or sometimes incentivised post facto. 

Riding the Tiger

So where does that leave the marketer? Does she have to unlearn everything that she's acquired over the years? No, not really - but she must be smarter at picking up nuances from the consumer universe she's dealing with. Let's look at a few guidelines which may be useful:

1. The first fundamental rule of brand management has not changed - if your proposition is not addressing a need or a want, go back and start all over again.
2. The second fundamental rule remains the same - be differentiated and be relevant to the consumer's needs or wants.
3. Don't think 'product', think 'augmented' product, and better still, think 'possible' product. Consumers are already doing so, and so are your smarter competitors. 
4. Mass media is not dead, yet. As long as mass markets exist, the validity of mass media will remain. However, how a marketer needs to carefully blend and manage how mass media communication (one-way) meshes in with the two-way communication in other consumer engagement spaces, particularly when many consumers are engaging with each other over a single brand acquisition issue - think of it as a multi-way conversation in a multi-verse. 
5. Time has shortened. The consumer decides faster and adopts or jettisons brands faster. The marketer must deal with faster decision times and ride this tiger in order to build a successful brand today. 
6. The consumer is teacher, professor and mentor - always and forever. Alexander Pope's dictum "The proper study of mankind is man" has never been more true.

The good old-fashioned virtues of solid product performance, excellent after-marketing, caring for the consumer and showing that you care, building trust and confidence - these are still highly valuable today, perhaps even more so, in a highly fragmented market space of multiple choices. I venture to suggest that these virtues are permanently desirable for a brand.

The marketer who works towards building these virtues will build very strong brands indeed.

Society for the Care of Political Leaders who've been whipped at the Hustings

I saw this picture recently in a newspaper, and my heart bled.

For a minute I thought that these were refugees running away from the depredations of those evil Bokacho.... Haramza... militants in Nigeria. I was reaching for my wallet for a hefty 10 buck contribution towards their board and lodge, when I looked more closer at the picture.

And my heart bled even more. Here they were, the erstwhile political leaders of our Nation, who'd been kicked out of their cushy jobs by the populace.

And these are not the only ones - the list is pretty long: Kapil Sibal, Salman Khurshid, Arvind Kejriwal, Farooq Abdullah, Arun Jaitley, Milind Deora, Gurudas Kamath, Priya Dutt, Praful Patel, Sushil Kumar Shinde, Raj Babbar, to name just a few.

No more privileges, no more power - what will they do for their daily bread, since they've stopped earning theirs by honest toil many decades ago? Nobody's going to give them any bribe or hafta any more. No Arnab Goswami will call them to the studio and shout at them "the nation wants to know...." Death, where is thy sting? is the question that most of these leaders are asking themselves. 

I believe that what our country needs is a NGO focused on the care of politicians who've been busted by their electorate. Three square meals totalling 50 bucks a day, unless the fellow stuffing his face happens to be the sardar fellow called Ahluwalia in a blue turban, for whom the ceiling is fixed at 28 bucks a day less 10% TDS and 12.36% Service Tax.

So, here I am, setting up this NGO -  Society for the Care of whipped Political Leaders (aka SCPL - Scalpel - which is a nice mnemonic).

Of course, not all of them will need the services of my NGO. This gentleman thought he'd get a solid job doing what he's good at - this is a service which will never go out of fashion.

But he found there's a smarter way - he quarreled with the judge at the court, and became a guest of the nation for a couple of weeks. The food is better, the housing is superior - all modern conveniences are available, including HDTV, etc. And of course, the neighbours are all upper-class, moneyed types. Great place for networking for future prosperity.

And there's Arun Jaitley, who's got friends in high places. He's already got a job, with the promise of being sneaked into the Lok Sabha in a perfectly legal way, and his appointment will be regularised post facto.

But there will be many takers for my little charity. And come the state elections, there will be many more. I wonder where I'll house them.

I'm looking for like-minded and generous souls who can contribute towards this NGO - we'll have entertainment evenings when the recipients of our charity can reminisce about the great work they've done for our country, how the bureacrats used to quake in their chappals, and how rotten the current government is. I hope that some of their colleagues who've won at the polls will come in and hobnob with the inmates and talk of the ballot boxes they've stuffed together in their callow youth.

We are choosy, though. Not any old leaders whose rear has been kicked can come in - we reserve our charity for the deserving rich and criminal. It will be easier for a camel to go through the eye of a needle than for Mani Shankar Aiyar to enter the kingdom of Scalpel.