IIPM ARTICLE AND EDITORIAL: October 2010

Monday, October 25, 2010

INSURANCE IMPRESARIOS

Remember the evangelist insurance ads that hollered at you to either buy the insurance products or die, be maimed, suffer unimaginable ill-health, misfortune and the worst doomsday scenarios possible? Well, there are two, perhaps three, firms which are beating the status quo, churning out ads that talk about everything positive, but disaster! Great start, but are customers buying the spin?

From “Your partner for life” to “Karo Zyaada Ka Iraada”, the transition in the tagline is representative of the metamorphosis in the mindsets of the ad makers engaged in scripting advertisements for an intangible product viz. insurance. Well, the change in the language of the tagline from English to Hindi indicates that the insurer wants to speak the consumer’s language and probably is more comfortable in their own skin. The ad campaigns of insurance firms usually communicated doom and fear and all thanks to the communication strategy, people invariably bought policies out of fear or guilt.

The year 2008 changed it forever and turned out to be the point of inflexion which saw the creation of a whole new benchmark for insurance ad campaigns. The jingle, “Nazar ko kya chahiye, khwaab thode zyaada... khwaab ko kya chahiye, rang thode zyaada... karlo phir zyaada ka iraada,” from the stable of Max New York Life Insurance Company Ltd (MNYL) or for that matter the jingle, “Ye kis pyari hifaazat mein ho, befikri ki halat hai...” from the stable of Bajaj Allianz Insurance challenged the status quo and helped push the boundaries in search and creation of a bigger and brighter tomorrow.

Why these ads covered miles was because of two reasons. One, they didn’t talk about death, accidents, despair, misfortune or any such doomsday scenario. Two, at the first glimpse, no one would have ever thought that the advertisements pertained to insurance. For a change, an insurance ad spoke of a dream and intended to awaken today’s India to re-look at itself, its realities and the untapped possibilities. The new brand campaign was not only instrumental in seeing to it that the brands (MNYL as well as Bajaj Allianz) broke through the clutter in life insurance advertising but also ensured an unprecedented surge in brand metrics.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Monday, October 18, 2010

BIG LEAGUE OR NO LEAGUE

Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!

To reach these big order deals and to gain the confidence of clients, Indian companies do need to urgently brand themselves now as value players. Chakraborti of Gartner laments the fact that not a single Indian IT company ranks among the top 100 brands of the world. In B2B branding of this nature, the most important differentiator is the branded product. Indian companies have to be up there leading some next wave of IT adoption now, rather than just playing catch up. That is how clients will identify their capability for big ticket deals. Leading firms are realising this. For instance, Infosys has created a research group called the Software Engineering and Technology Labs (SETLabs), which has developed numerous process frameworks, methodologies, service platforms and reusable knowledge objects. However, as Apte of Forrester points out, the innovations made by Indian companies are generally below the water line; as in they are more in the cost control arena. Clients, meanwhile, define innovation differently. Big ticket acquisitions can also stamp your authority on the world map, just as it happened for Tata with Corus and JLR.

Besides strengthening their base, it is also imperative for these companies to pay a lot more attention to client facing roles. Currently, as per analysts, there is a total neglect of the importance of marketing. Marketing people in these companies are mostly restricted in their role to documentation and proposal building. There has to be clarity in message and positioning by each player with respect to what they stand for. Chakraborti says, “Apart from a very few companies, it is restricted to participating in seminars, events, doing white papers; case studies et al. But marketing thinking is lacking. Creating credibility at multiple levels is necessary – India, Indian IT companies as a destination for outsourcing as well as the services they offer.” In that sense, controlling marketing costs, which Indian companies did in the tough recessionary phase, isn’t exactly what the doctor ordered. Admittedly, Indian IT majors have been ramping up on onsite and near-shore hiring over the past few years. They have to leverage that well.

However, it may be noted that we are mostly discussing the Big 6 here (TCS, Wipro, Infosys, HCL, Tech Mahindra and Cognizant). It is still quite hard to discount their ability to scale up and play on volumes. But the Indian IT sector has a very long tail following that. The challenges for this tail are even greater, as they have to quickly scale up to take strong positions in niche areas. Otherwise they may actually be on the wrong end of the acquisition bandwagon. But experts warn that the global M&A ball game is far from over. IBM has made 74 acquisitions in the business analytics space in a span of one year. Also, the recent acquisition of EDS by HP, Sun by Oracle and Satyam by TechMahindra have had significant impact on partnership models and IT SP strategy over the long-term. In addition, over the near-term, the industry could expect global players making a bid for Tier-2 Indian players and acquiring stake in a Tier-1 Indian IT SPs as well. Big IT is on the prowl; and if Indian players fail to enter the big league with huge promotional exercises, it could well prove a short life for their so called ‘low-cost’ brands. They have had their share of cheap; now it’s time to take their share of best!

Saturday, October 16, 2010

BIG LEAGUE OR NO LEAGUE

Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!

While sharing his views on the concept of justice in the Indian context, Nobel prize winning economist, Amartya Sen, shared an interesting anecdote with us to hilarious effect. This was when his car stopped at a traffic signal, and one of the vendors at the signal came up to his car, attempting to sell Sen’s own book to him. The boy exclaimed, “Please buy it Sir. It is cheap and best!” Sen also went on to remark, rather self-deprecatingly, that this is what he always wanted to be – cheap and best!

Coming to the context of India Inc. in the global milieu, Sen’s words will strike a chord for sure. After all, wherever Indian companies have seen a larger role for themselves beyond their home market, the most critical competitive advantage they have sought to exploit is the cost advantage. ‘Cheap’ and ‘Indian’ seem to be almost synonymous (best, meanwhile, is a relative term) as a result; and Indian firms have just about mastered the frugal engineering mantra, in sectors as diverse as steel, telecom, pharma, auto and textiles. Of course, this is most relevant in the context of Indian IT, which is India Inc.’s most phenomenal success story till date. For years, Indian IT companies have taken up opportunities for cost arbitrage and have developed newer capabilities in the IT domain, wherein they could capitalise on the arbitrage as best as possible. How companies like Infosys, Wipro and TCS became the new age industrial giants in the process is well known.

Even though the ‘cheap’ label does make us cringe at times, criticism of this approach is both logical and illogical, depending on the period that you consider for your assessment. Till the 1990s and the early years of this century, this was the best foot they could put forward, at a time when the lower end of the IT ball game was a blue ocean of sorts, and they had the right fishing gear! They did it brilliantly then; no question about that. But while it is important to know when it is the right time to latch on to a particular business strategy, it is equally important to know when to let go. And with the Indian IT sector, the time to let go is coming sooner than anticipated. Moving up the value chain has been a desirable and aspirational business approach for quite some time, but it may not be too far-fetched now to deem it a necessity. The lingering questions that now come to mind are why, when and yes...how?