As promised my next blog is on Reinventing Marketing during these trying times. I must add here that many examples will be my own personal experience as also some shared by friends and colleagues. Some numbers mentioned by me may be off the mark since I am working out of my memory.“Wikipedia: ‘In economics, a recession is a general slowdown in economic activity over a sustained period of time, or a "Business cycle" contraction. During recessions, many "Macroeconomics" indicators vary in a similar way. Production as measured by "Gross Domestic Product" (GDP), employment, investment spending,” Capacity utilization", household incomes and business profits all fall during recessions.’‘Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.’
I am 8 months behind schedule and have no excuse/s to give..I was just awfully busy at my place of work ensuring we stayed ahead of the pack and not get caught with all the gloom around us.
On 09.09.09 I ended my 1 year term with Deccan Charters and am now working on my entrepreneurial venture.My first assignment was to complete this long overdue note.
The good news is that my company has had significant double digit growth over last year and are well in the black on bottom line with a healthy EBITA.. Our line of business is General Aviation.
I also had a tough time trying to begin this section.Where should I start? Where do I stop?Well here it is now – with due apologies for the delay.
In December 2007 there was a terrible recession in my life.
My productivity dropped, my ability to contribute was constrained and my very existence was at risk. My ability to generate revenue was severely hampered.I was prescribed a wrong drug and was over medicated with the same.As a result I was diagnosed with Steven Johnson Syndrome.
A life threatening illness with a high mortality rate and a prolonged life of agony.
So what’s this got to do with the recession you may wonder?
On 24th December 2007 I came down with 104’F Temperature which refused to subside.On 25th I was taken to hospital By this time there were eruptions on my face and body. The doctor advised that I be admitted immediately.The next day they treated me for viral infection. 2 days later they thought I had measles.My condition got worse and then began my nightmareThereafter for the next 5 days they tested me for measles, small pox, HIV, venereal diseases (much to my consternation in front of my wife). I was treated for god knows what. They even pushed an IV needle into my muscle ( by mistake – such was the panic). The doctors were clueless about what was wrong with me.They said so openly admitting they have never been faced with such a dilemma.Fed up with all the experimentation and the sense of hopelessness my boss at that time moved me to another hospital.The doctor who treated me knew exactly what was wrong with me, having treated some one for the same illness in the US a few months back.I was out in 10 days. Weak as hell, loss of 20 kilos.( a life long desire of mine to be slim was fortunately achieved)Then started a long recuperation process at home- filled with medication.I was by this time cursing God and the medical profession and angry as hell.Depressed and frustrated at being so helpless.But very soon I realized that there was only one person who could help me.Me.I thought getting out of hospital was relief enough, but the doctors cautioned me about the possible damage to my liver and kidney due to the prolonged effect of medication so to be carefulI was, extremely cautious, eating healthy, abstaining from liquor, no late night parties, taking it easy at work etc.Till one day I said enough is enough – stopped medication and started work on my body and mind. I do yoga every day; I hit the gym for 60 minutes on weekdays and 90 minutes on weekends.I am almost back to normal. No organ damage barring la slight oss of eyesight.(I now wear spectacles)I now work 12 hours a day, 5 days a week with my company and on weekends and after office I am working hard to put my entrepreneurial venture on stream.
So what’s this got to do with the recession? Or do some of you see a similarity?
First signs of slow down, we start experimenting, thinking this is nothing serious.When nothing works we resort to drastic measures.We then give up in despair and panic and then pray to the almighty to show us a way out. And curse god and everyone around for the shit one is in.( believe it or not we had record passenger traffic to a religious destination this year- talk of looking to God for salvation)We tend to hire consultants at exorbitant costs, spending money which can be ill afforded to listen to them telling us exactly what we know- but with conviction and through fancy power point presentations. But if we stay the course, not panic, speak to people who have survived the earlier recessions, some one who experimented and got it right and survived, we will come out stronger.This is the law of the jungle, the weak in trying times will fall by the way side and the strong will get more resilient and stronger. See the great migration in Africa and you will see how the cycle of life plays out there.This is the best time to re engineer and get the organization toned up for the good times-a lot of hard work coupled with some painful decisions that need to be taken. For me every moment in the gym is a painful reminder that it was I who let my body go to seed, all the beer, the pepper steaks and the cigarettes.Much like organizations who in the good times get complacent, build layers of fat all around and create a sense of ‘ security’ and in bad times work hard at shedding that very fat and then look for quick fix measures.Let me assure you there is no quick fix solution.
Panic and knee jerk reactions make it worse.
On Marketing on a lighter vein – In many companies it’s a department which departs the minute a budget is allocated to go and spend with little or no accountability to the top line and in tough times it becomes the departed. With budgets being slashed and marketing being blamed for non performance. In many companies that I was associated with, Marketing has always been a cost centre and sales the Revenue generator.The Marketing department was the high profile secret weapon that everyone knew was important for the company’s success but no one knew what exactly they did.I have worked with marketing professionals who spend a lot of time and money in research, tracking brand spends, share of voice, share of market and on advertising.They are the custodians of the Health of the brand. But I guess on hind sight it was more to do with the cosmetic health of the company and was skin deep.
The best way to know the health of your company is to listen to your customers and 'intermediatories. Your self. By being in the market on your own.
I still know heads of companies who still do market visits religiously and act of feedback.
When I was being recruited as the Marketing head for Air Deccan, India’s 1st low cost carrier just when it was launched – Capt. Gopinath the Managing Director after the interview mentioned – I don’t want you to run a marketing department.‘It’s always a cost centre and rarely accountable for anything tangible.’This was news to some one who had grown up being taught that Marketing was the think power behind the success of most companies and had also worked with some great Marketing minds. Thus was born perhaps the worlds 1st Chief Revenue Officer.A designation that solely and squarely placed the onus of generating revenue on the marketing and sales department with very strong interdependencies.My KRA- Revenue-Topline and ROI. While in the initial period, I focused on Marketing, strategizing, planning, tracking competition, focusing on gathering customer insights and identifying problems and opportunities to encash on, managing Sales, over time every discipline which impacted Revenue for the company was thrown at me.Distribution (travel agents, corporate sales, online, call centre, the website) Route planning, Pricing and revenue management, revenue from catering, In-flight sales, miscellaneous sales though space selling within and outside the aircraft, the in-flight Magazine, Revenue from alliances in addition to advertising sales, Marketing, PR, research and Customer relations.Each of these departments had a role to play on either the service delivery for the organization which impacted revenue directly or indirectly.
The best part was being part of the domestic IPO road show which too was a ‘Revenue source’.
The most difficult part of my life at Deccan was being away from home and not watching my daughter growup. I used to travel 20-22 days a month.
Does this look like what a Marketing department does in a regular company?
But looking at it logically should not this be part of the marketing and sales set up?This experience of close to 3 years taught me the end of marketing as I always knew.When I look back – That was some experience and for those who don’t know – In Less than 30 months we became the 2nd Largest Airline in India.It also won us the coveted Business Today (India’s leading Business Magazine) ‘Most Innovative Marketing Company’ award. It also succeeded to fail and was martyred as a company that gave wings to the dreams of a billion Indians and changed aviation in India for ever.
The reasons for Air Deccan succeeding only to fail are content for a book.But it raised a lot of relevant questions in my mind which I would like to table.
Should marketing and sales not be responsible for every aspect of an organization that impacts Revenue?In today’s day and age when all around, dark clouds of gloom surround us I believe it is important for the organization to be Revenue focused and waste averse. Forget share of voice, do your brand tracks but ensure optimized marketing spends with an eye on ROI. I know many conventional marketers will say that I too am panicking, but I practiced this in my next assignment at The Oberoi- with KRAs that were tangible and measureable for every member of the team and also now at Deccan Charters. The outcome- unparalleled growth with a team where every member knows his/her measureable goals. But the Revenue department has to be patient and comprise a team that focuses on the short, medium and long term.
So how should a Revenue department behave in these trying times? For those of you who are Gymers I have a small exercise that you should try.At a gym sit or stand in a comfortable posture, close your eyes and focus on a blank white wall in front of you. The result must be a blank white wall in your minds eye.Yoga practitioners will find this easy.For the uninitiated this will be quite a challenge – but with a bit of focus and practice this will be doable.Once you have attained this stature of being able to see the ‘ white wall’ or a black dot in your minds eye, now get on to a tread mill and try doing the same at a walking pace and then at a faster pace. Remember to grip the handle bars in the initial phase. Or you will find yourself flat on your back in no time.What you experience is what’s happening in the real world today.Your entire being is in a state of disorientation. Try as much as you like you cannot stay focused. With several thoughts racing in your mind while your body is in motion, you will not being able to control them & pin them down to the ‘emptiness’ that is the blank wall.But with time and you realigning your status quo to one of being in motion and realigning your energies –the blank wall is attainable even in the changed environment where everything seems to be moving far too fast.
Such is the time we live in. With Chaos all around us and things moving so fast that what you planned for tomorrow is redundant before the end of day, today.Companies who in good times
- eulogized their ‘Human asset’ are now shedding those very assets
- talked of how IT was cutting edge are now eating their own words and cutting IT budgets.
- talked of a great work culture now are cursing the laid back attitude of their senior team members
- had their CEOs on the front page of news papers preaching ‘ success’ are now conspicuous by their absence.
- Increase market share
- Rationalise inventory
- Negotiate better to reduce costs with your vendors/ landlords etc
- Reinvent your self and the organisation
- Retrain and redeploy human resource
- Cut waste
- Conserve cash
- Cut costs
- Cut back on production
- Tighten your belts and wait for the bad times to pass
To make things worse the Satyam fiasco has taken the wind out of our sails with finance departments now becoming more risk averse in the name of corporate governance
Great warriors like Che, Chengiz khan, Hannibal, General Rommel, spent as much time strategizing as implementing and their strategies were instrumental in surmounting great odds to win.When defeat came their way, it was because they forgot the old ways which got them their success in the first place.
At Air Deccan we took our learning’s from these great warriors who despite seemingly insurmountable odds went out and proved the skeptics wrong.We planned and implemented parallely while fine tuning the strategies as we went along. Speed in identifying problems, opportunities and acting well thought through plans before competition even realized what was happening’.
What has this got to do with the recession?
In 2003 as a company we did not have enough money and resources. We were living each day as it came.The no of passengers traveling by air in India was 14 million. A fraction of the nos traveling by air in small country like Singapore. The industry was heavily regulated and competition held the business in a tight vice. No one wanted to join Air Deccan and funding almost non existent.
We started by questioning the basics.The good news was that there were very few people in the company, with aviation background. As a resulted we ‘reinvented the business with new initiatives which today is the norm.
Profitability versus cash flow?
A very important learning for me at Air Deccan and my assignments in turning around loss making companies was the importance of Cash flow in addition to ensuring a profitable existence.What shocked me about Full service airlines was the fact that most of them had to borrow funds every month to stay afloat.The reason: 95% of their tickets were sold by travel agents who enjoyed a 30-45 day credit facility. The money came back to the airline in about 45 days and god help ifv there were delinquencies. During this period the customer had flown, the airline had to pay fuel bills, lease rentals, salaries and manage other expenses where the credit periods were not conducive. The airline however at the end of the year showed profits in their books but had little or no money to manage monthly operations.Working capital loans were accepted as a way of life.What kind of business is this?At Deccan we ensured absolutely no credit to any one. And we paid our vendors and partners in 30-60 days. So while our expenses were about Rs 200 crores a month, at any point in time we had Rs 210 crores with us due to our practice of selling tickets for travel 180 days out.Even the advertising business where I turned around 2 loss making agencies, I worked out a retainer fee model where clients paid 3 months retainer in advance. In fact we had surplus cash at the beginning of every quarter and we started a small treasury operation doing inter corporate lending.
You need money to run your business and if you have to borrow to do so I would suggest you shut the business down. It will shut any way in time.Or rejig your model to ensure a healthy cash flow.
What worked in the good times may not work now. What did not work in good times may work in these times?
The obvious must be re-examined far more closely. With a cold calculated approach leaving no place for panic and knee jerk reactions. Remember to keep your emotions behind at home.The organisation must break out of its rigidity, become more malleable and reinvent itself. Those who resist change must be enlightened, cajoled, coaxed and then dismissed if they still refuse to fall in line. But do not waste too much time trying to get them to buy in. In 3 of the companies that I turned around – I shortened the enlightening period and axed those who were in the company while they were making losses and refused to toe the line under my leadership. I then got in youngsters, mavericks who demonstrated streaks of ‘rebellion and indiscipline but who loved the idea of adventure and working for a cause- turning around a loss making company. It’s easier to mould putty than a block of cement.Most important when you hire a team with the right attitude and passion, people who want to change the world, life becomes more enjoyable and easier even with the most difficult challenge ahead of you.Some of the things my team and I did over the past few years should demonstrate how some of what I preach helped us in the past.The Revenue team must revisit every aspect of the business and question some sacred cows
Reinventing distribution:
At Air Deccan the low cost airline, our business model was to go direct to the customer. Save the 7% commissions to intermediatories. But that again was a knee jerk reaction and a blind belief in what worked for low cost airlines in Europe and in America.We used the Internet and the call centre. Built India’s first online booking engine. But we pissed of the travel agent community who wanted commission and credit. I knew that the Travel agent community was critical to our success in the short term.But there were some sacred cows.Travel agents for decades had gotten used to a commission regime, to credit period of 30-45 days with airlines.( Its funny that the airlines who were the principals needed working capital to tide over the credit period while the travel agencies used the money to roll over). It was an expensive arrangement where the Airline was on the back foot with over 95% of business coming from the Travel agents.I did not have a problem with this save for one major issue.How can I borrow money to fund my own operations and the travel agents live off what is my bread and butter?But I realized the importance of the Travel agent in the short to medium term.So we worked out a deal with a Credit card company and launched the worlds first Travel Agent credit card ( one must understand the magnitude of this initiative when one realizes that the travel agent fraternity was not the preferred segment for credit card companies to extend credit to)I got my money upfront, the TA got credit and the bank income from revolving credit. It was a win win plan.Over the next 2 years we ensured that direct business to Deccan accounted for over 70% of revenue and also expanded the base of travel agents (there were about 1000 IATA registered travel agents when Air Deccan entered the market in 2003)At Deccan with a ‘deposit account ‘any one could sell tickets. We took this base to 7000 agents who placed their trust and a deposit with us, and used the ‘credit’ to buy tickets- much like a pre-paid sim card. We also got working capital at relatively no cost. We also started selling tickets from petrol pumps and web stores and through any one who was willing to place an advance with us.. This also brought down my marketing costs. Since the deal with the Fuel retailer also encompassed us getting free hoardings at all their outlets as also distribution of promotional leaflets to any one coming to fuel up.
In my next assignment in the hotel space I worked out an arrangement with 2 Internet marketing companies where they would be paid on materialized room nights and not on eye balls, or leads.The arrangement also ensured that monthly targets were set and the Internet company would invest marketing dollars to reach those targets. It was an interesting arrangement.Room nights from the Internet have gone up and the ARR is the highest from this medium.
Low cost. Hi Impact marketing initiatives:
At Propmart, the online real estate services company I set up in 2000, I had a very small marketing budget. But needed to reach out to every customer at little or no cost.Doesn’t every marketer want to do this?In 2002 mobile phones were at an inflexion point and were aggressively pursuing ‘volume’. I approached a mobile operator with an offer. Send sms to all their customer at 50 paise (US 10 cents) per SMS – to reach 5 million customers. With a message and my call centre number to call back in case they had a real estate need. The operator asked for Rs 1.50 per sms and I was told in no uncertain terms that the same was non negotiable.This would have cost me Rs 75 million.+I did not have this kind of money. More importantly I was pissed as hell by the high handedness of the cell phone operator and could do nothing about it.But every dog has its day!.Two weeks later the Cellular operator launched a promotional scheme to grow the pre paid market.Rs 150 per month rental for a pre paid card with unlimited sms’s free. I went and bought 100 Nokia phones from the used market for Rs 2000 per phone, got 100 pre paid connections, hired 300 freelancers at Rs 2000 per month and got them to start sending sms across India. From our conference room. I was clear that the promotion would run for only 30 days and needed to take full advantage of this loophole.We ran 3 shifts of 8 hours each- round the clock.Where did I get customer nos from?Simple - Bangalore circle starting with 98450 00001 to 9999 ( for each circle we did the same for Delhi it started with 98100 00001, Mumbai 98200 0001)One person per day – 8 hours would send out 500-600 free sms s a day -so working 3 shifts we would send out close to 150,000 sms s a day 7 days a week.So what if even 50% were wrong nos. We did the 5 million customer base at under Rs 1 million.We did this for 1 month during the duration of the cell companies promotional period. The operator blocked our sims, threatened to send a legal notice. Did we care? We were well within the purview of the law.Our call centre nos kept buzzing for weeks and business kept growing in leaps and bound. The ROI on this exercise was beyond all imagination.That was David taking on Goliath once again.
Change the battleground:
Every problem throws up an opportunity!At Propmart very early on in life we realized that supply far outstripped demand in the market with Real estate developers seeking new avenues to sell.The internet in 2000 was at a nascent stage in India and was being touted as the new marketing weapon that sold to people across the world.We realized that whoever controlled demand controlled the market.Demand for developer properties in those days came from NRIs settled in the Middle East in countries like Saudi Arabia, Qatar, Oman, Dubai, Bahrain & the US.We therefore went and opened Franchisee offices in these markets at little or no cost to us on a ‘revenue share’ basis.For the US we worked out a revenue share arrangement with a leading Indian ‘daily’.Remember when the recession is on us – it impacts every one and there are ‘win win’ deals that can be struck with companies.In India we went to hoarding contractors who had empty billboards and struck a deal where we would pay them cost of painting hoardings. They in turn negotiated a lower cost of painting. If my memory serves me right we got close to 90 hoardings in 5 cities – at a fraction of the cost of renting a hoarding. With great visibility for over 2 months. At Air Deccan I was called Barter king. Most deals that I struck were in lieu of seats. With an average load factor of 82% we still had close to 4000 empty seats every day. We traded seats for everything – from advertising to water for sale in the aircraft to hoardings and even for printing of boarding cards and baggage tags. The ‘cash outflow’ saved was close to Rs 10 crores a year.
Marketing as a stethoscope - The Ear to the ground:
Gathering consumer insightsHamara Bajaj: At Lintas, I had the good fortune of working for one of the finest minds in the advertising fraternity in India- Alyque Padamsee. He would insist that I spend ample time standing at Traffic signals to understand consumer behavior on 2 wheelers.Interesting insights:The Yamaha 100 cc 2 stroke consumer would keep throttling the accelerator – to get ahead fastest off the block when the signal changed. 0-60 in 8 secondsThe Hero Honda 4 stroke customer was 0-60 km in under Re. 1The Bajaj scooter consumer was one who lovingly with great care take off to reach his destination safe with his family. The Bajaj scooter owner loved his vehicle and would take better care of the vehicle and took great pride in the fact that he Owend a Bajaj. Thus was born the legendary Hamara Bajaj campaign. As also India’s first computer animation film for Kawasaki Bajaj.I must add here that there were many skeptics on whether Hamara Bajaj would help the brand. But Alyque did back the campaign to the hilt and so did Mr Rahul Bajaj and his team.It did – sales started picking up Maruti Omni :At Hindustan Thomson we were assigned the Maruti business.The Maruti Van and the Maruti Gypsy in 1988 was doing very poorly and it was not viable for the company to carry on. The sales were around 200 vehicles a month for the Van and they needed 1000 a month to make money. The Maruti Gypsy was selling 100 a month and needed 500 a month to make moneyWe were told ‘create campaigns that worked’.All initial signs told us that these were hopeless cases.But we got down to work. Led by Sanjeev Chadda from Account planning(now MD of Pepsi India), Sanjay Sehgal from Client servicing- now at a very senior position with Nestle at Veve and Dennis Joseph , from the Creative department- now teaching in New Zealand.The Maruti Van case study: Research showed us that the Maruti van was perceived by consumers as an unsafe vehicle since it did not have a front bonnet. Any accident and you would lose your leg. Some very good ‘negative PR’ by competition. After scanning through numerous months news reports we did not find a single case of an accident which resulted in loss of legs. All crash test results showed us that The Maruti Van with its thinner body sheet, the crumple free zone and superior technology made it a safer vehicle than the ambassador and Fiat cars which ruled the roost in India. .But no customer was willing to believe this. So out went our efforts and the first approach to change attitudes to project the Maruti van as a safe vehicle.Some amazing insights into the mind of the consumer:Those who owned a van were extremely happy with their ‘car’They used it as a work horse during the day – carting goods, to and from work and in the night they used it for family outings to the gateway of India, to the restaurant, for long drives etc.In their minds the van was not meant to be used for zipping around. They were clear it was a family car and hence had to be driven safely.One reason for their preference of the van over a regular ‘3 box’ car was the fact that the van was much more spacious. The bonnet space and the boot were both intrinsic to getting more space.We therefore decided to ignore the ‘ safety’ platform and decided to deflect all energies to sell ‘space’. Get people to focus on the positive rather than get them to overcome a safety fear.
The brief to the creative team itself was inspirational.One hot summer afternoon in June in Delhi, we got every one in the Maruti team at the agency fired up to go out for lunch and beer. We jumped into a 3 Box fiat car - some 8 of us- 4 in the front and 4 at the back.. Sweaty, cramped like sardines we all piled in and reached the hotel.After a sumptuous meal and a couple of beers that added a few inches around our waist on our way back each and every one cursed the fact that we would now need to be packed like sardines again. No one wanted to hire a cab since the same was expensive.So back again in the closed confines – much like the prisoners on the train toAuschwitz we started our journey back. Cursing.10 minutes into the journey, the car ‘spluttered to a halt’ and refused to start.Some more cursing and we all started walking looking for alternate means of transport.After walking for a few minutes we heard incessant honking and looked around to see Sanjay in a Maruti Van on his way back from a meeting.We all clambered on and all had just one thing to say- What a relief not to be cramped and that the Van had so much space.This was born the ‘Travel in space’ campaign by Dennis and his team.Within 3 months of the multi media campaign breaking sales started picking up and touched 2000 vehicle a month in the 6th month. The case was similar for the Gypsy where the insights were as exciting and the results as spectacular. Those who want to know the details may post their request here.
Working on just ‘trends’ alone can be dangerous:
The gym I go to has a peculiar problem. They have 450 members who have paid an annual fee and only 130 are regulars . The rest have stopped coming.The marketing person (at HQ in another city) has not come to the gym for months since it is a franchisee business.When I checked with the Franchisee manager she mentioned ‘Sir 30% is the norm for regulars worldwide. We are not too concerned about the 70% who have paid but do not use the gym regularly.’Whoa! Some one needs to be sacked for convincing the franchisee that all was well.It did not matter to the franchisee that he was losing money and that despite that the Franchise fees had to be paid regularly. Else head office would come screaming.I asked some obvious questions? Did anyone speak to the 70% who paid and are not coming?Has a satisfaction audit been done with existing members? I for one after expiry will not be renewing my membership for several reasons. My term expires on 31st March 2009 and no one has spoken to me for renewal?Has the franchisee evaluated his best options to increase revenue? Yes he has – he has to increase the no of new registrations!!!Has he looked at ‘increasing revenues from existing customers? Duh!!- whats that?Isn’t it obvious what the Revenue department needs to do?I would not be surprised if this company shuts down – recession or no recession!
Reinvent the organisation: Innovate the very core of your business.
Take a few calculated risks:Turning around loss making companies:When I took over my first loss making advertising agency, it was a company that was making losses for the last 4 years. The good news – the agency had cut back losses significantly.In 2002 it had revenues of Rs 6 million and a loss of Rs 4 million. The projected revenues for the next year was Rs 6.6 million and a loss of Rs 3.5 million. Going by this trend, in about 5 years we would be in the black with revenues of Rs 10 million & just about break even.It was a plan for the existing team who had been with the company for years.I was all of 29 years and raring to change the world with a couple of good achievements behind me. And this plan sucked. It lacked vision, was complacent and boring.We had 43 people, 18 clients with the largest spending Rs 1 million. There was no zeal to go and fight, there was helplessness and a ‘resigned to ones fate ‘attitude.Nothing was going to change, so just bide your time and wait for ‘death to come to you’.The management at The Bangalore office had resigned themselves to this reality.God I was so angry. So young friend Swapan Seth (India’s youngest creative director at that time) and I went about cleaning the place. But we had to toe the line since we had a ‘boss’.But between the 2 of us we decided to go after one client with all guns blazingt. Invested our money – worked hard during the day and drank ourselves silly at Bangalore’s hottest pub- Black Cadillac. This incidentally scared many stubborn cynics within the agency to finally leave. We worked hard and partied hard and along the way picked up some young ones who knew no better.After 2 months of work we bagged the one client we had trained our sights on –HMT watches – a Rs 50 million client.What a win that was- against the best of the best in Bangalore. Focus and you shall achieve!I remember going completely drunk that night to office with Swapan and almost set it on fire with joy and anger. The reason for this needs another 5 pages. But that’s another story. Why we did not get sacked is yet another interesting story.But we soon took over running the agency.
The old gaurd left.Swapan took on the task of cleaning up the creative cow webs and getting some energy into the process and department.While I went about cleaning the financials, collecting what ever was outstanding in the market as also put in place systems and processes to strengthen the account management process.Sacked all the small clients who had not paid us for 6 months( after collecting the money), got rid of all the flab in the company- some left on their own will, some left completely shaken up and some were thrown out unceremoniously. I did not care about ‘employee welfare, job security etc. My company would have bled to death and no one was willing to stem the flow of life. Of what use is it breeding leeches who only cared about their own welfare?We focused our energies on the Big guns – went and met some who politely told us in no uncertain words- Look we like you guys – buy hey nothing will change. Come back when you guys have some good work to show.We were also clear – we will hire a young team – mavericks who were willing to work at low salaries and who would follow us blindly- and we did .We also changed the business model. We brought in a fee based model – a first in India in 1992. The advertising fraternity – took us to task saying we were undercutting – so we called it Direct Marketing and we also started consulting for small clients who could not afford the E&Ys, the Arthur Andersons and other large consulting firms. In close to 4 years we reached a turn over of Rs 200 million , well in profits, awards galore and a reputation for wining every pitch we went for. More importantly we were seen as a bunch of mavericks who loved what we did and worked hard and played hard. I still remember that any one who joined new – was told at the interview stage itself that – they would need to do ‘ bottoms-up’ in a pub, with jugs of beer being paid for by some of us. Many did not join but those who did – did us proud in the pub and at work. Some of these bright young lads and lasses today are very senior and well respected professionals in India and overseas. In 2004 I got to office my babies feedding bottle ( nipples et all).It occupied pride of place in my room and was a talking point for clients who made the mitake of coming up to my room.
Any one who came to me with a problem was told to hold the bottle while I gave them a solution. Within days those who came to my room had one request - please leave the bottle where it was since, while they had a problem they also had a solution and only needed to take my advice on whether it was the right one. More often than not their solution was bang on. I got my young turks to start taking decisions. We were suddenly an agency of decision makers. I must add here that we also had a bunch of people who without consulting me took decisions that backfired. They had got carried away with their own belief in their limited experience.But hey they at least tried.
The story was repeated in 1998 when I took over the loss making Bangalore branch of Leo Burnett. We turned it around in under 20 months.I had the experience of hind sight.
The lesson: Bring in new energy, study the problem and the opportunity in the marketplace, get focused- try not to open too many flanks and go after what may not seem like low hanging fruit. More importantly understand what competition is upto and what the need gaps in the market are. Build your strategy around what is seemingly unchartered territory. Get out into the blue ocean – away for your old red ocean strategies which may not work in these times..(Blue Ocean strategies is a must read).
But build a team of leaders, people not scared to take risks. Sometimes it helps to bring in new perspectives to well established businesses.
At Propmart to generate demand we for the first time in the real estate industry did away with charging buyers a commission for purchasing a property. This created a huge draw for buyers and we increased the brokerage from sellers as well as started charging them a fee to register their property.We went one step ahead- we convinced builders to outsource their ‘marketing to us. They knew how to build and we knew how to market and we had the power of the internet and the pull especially from NRIs. This was perhaps the first time that a real estate services company had ventured out and stuck their neck out to sell. It worked!. Today you hear of many real estate services companies who do this as standard practice. But in 2002, this was unheard of.
At Deccan Aviation (now Deccan Charters) where I joined in September 2008 after my illness, we went about fortifying the foundation that the team had passionately built for close to 12 years.We re-engineered business lines, added a new business, put in place processes, the marketing department was buried and the Revenue department started work – beginning with KRAs, a contact centre was set up, an internet strategy is being implemented, Direct marketing has been started, customer and trade relationships are being strengthened and every member in the team has been involved in the ‘ transformation’ that all of us have set out to implement. I am now older and wiser and believe in Team work, in harmony and in carrying the team along. But its quite an effort.Gosh how I wish I was younger. Life was so much simpler!
The old logo and brand identity has given way to a new ‘spirit’. With more energy, focus and zing.The result – year to date 2008-2009 we have grown business in significant double digit% with the bottom line having grown in triple digit % points. . With a plan to take advantage of the recession and grow 2009-2010 as aggressively.
When I look back at the last 12 months I realized that while all the systems and processes helped increase efficiency – what really helped us grow was a very simple insight.We were getting enquiries every week. The team was converting only 5% of the enquiries. A dictat was laid out – no enquiries will be answered to without my approval. Conversion went up to 40%. We just plugged the leaking bucket.
The next big step in my life is that I am going to launch my own company shortly.In the midst of the recession. I believe that we are still in the midst of the recession. A W shaped one( details on a W shaped recessions is given below)
The ‘good news around us is temporary. Time will tell if I am right.
I am sure there will be plenty of surprises, challenges, let downs and the rush of adrenaline. I have as partners a bunch of mavericks who want to create something new and take on the establishment. To break a few rules, rewrite some and make a difference.
Wish me luck.
I would request each one of you to post your feedback on this blog itself.
I would also be happy to provide any clarifications or answer any questions that you may have.
Thank you.
While researching the topic –Recession- I was pleasantly surprised to know that there are different kinds of recession curves. I am sharing the same with all of you as information. I believe India is in a W shaped recession.
V-shaped recession:The Recession of 1953 in the United States is a classic V-shape. In a V-shaped recession, the economy suffers a sharp but brief period of economic decline with a clearly defined trough, followed by a strong recovery.According to Macroeconomic Advisors, V-shapes are the normal shape for recession: "There is a strong historical “snap back” relationship between the strength of economic recovery and the severity of the preceding recession. Thus, recessions and their recoveries have a tendency to trace out a “V” shape."A clear example of a v-shaped recession is the "Recession of 1953" in the United States. In the early 1950s the economy in the United States was booming, but because the Federal Reserve was expecting inflation it raised interest rates, tipping the economy into recession. In 1953 growth began to slow, in the third quarter, the economy shrank by 2.4 percent. In the fourth quarter the economy shrank by 6.2 percent, and in the first quarter of 1954 it shrank by 2 percent before returning to growth. By the fourth quarter of 1954, the economy was growing at an 8 percent pace, well above the trend. Thus GDP growth for this recession forms a classic v-shape.
U-shaped recession:The Recession of 1973–75 in the United States could be considered a U-shaped recession.A U-shaped recession is longer than a V-shaped recession, and has a less-clearly defined trough. GDP may shrink for several quarters, and only slowly return to trend growth.Simon_Johnson former chief economist for the "International Monetary Fund", says a U-shaped recession is like a bathtub: "You go in. You stay in. The sides are slippery. You know, maybe there's some bumpy stuff in the bottom, but you don't come out of the bathtub for a long time."The Recession of 1973–75 can be considered a U-shaped recession. In early 1973 the economy began to shrink and continued to decline or have very low growth for nearly two years. After bumping along the bottom, the economy climbed back to recovery in 1975.
W-shaped recession: The Early 1980s recession in the United States is sometimes given as an example of a W-shaped recession. A W-shaped recession or "double dip" recession, occurs when the economy has a recession, emerges from the recession with a short period of growth, but quickly falls back into recession.The Early 1980s recession in the United States is cited as an example of a W-shaped recession. The National Bureau of Economic Research considers two recessions to have occurred in the early 1980s. The economy fell into recession from January 1980 to July 1980, shrinking at an 8 percent annual rate from April to June of 1980. The economy then entered a quick period of growth, and in the first three months of 1981 grew at an 8.4 percent annual rate. As the Federal Reserve under Paul Volcker raised interest rates to fight inflation, the economy dipped back into recession (hence, the "double dip") from July 1981 to November 1982. The economy then entered a period of mostly robust growth for the rest of the decade.
L-shaped recession: An L-shaped recession occurs when an economy has a severe recession and does not return to trend line growth for many years, if ever. The steep drop, followed by a flat line makes the shape of an L. This is the most severe of the different shapes of recession.The Japanese asset price bubble led to a Lost Decade in Japan; this period has been characterized as an L-shaped recovery. A classic example of an L-shaped recession ocurred in Japan following the bursting of the Japanese asset price bubble in 1990. From the end of World War II throughout the 1980s, Japan's economy was growing robustly. In the late 1980s a massive Economic bubble developed in Japan. After the bubble burst the economy suffered from Deflation and experienced years of sluggish growth; never returning to the higher growth Japan experienced from 1950-1990. Because the Late-2000s recession in the United States followed a similar economic bubble some economists fear the U.S. economy could recover from recession but enter a prolonged period of low growth.
Other shapes:Since the terms are informal, commentators will sprinkle in other descriptions. Financial blogger Mike Shedlock describes a WW-shaped recession with the country "slipping in and out of recession for a prolonged period of time, perhaps 3-4years or more.Financier George Soros has said the current recession may be an "inverted square root sign"-shaped recession. Soros explained to Reuters that this meant: "You hit bottom and you automatically rebound some, but then you don't come out of it in a V-shape recovery or anything like that. You settle down -- step down.”
Note: I have taken names of people I worked with and respect immensely. As part of the cases mentioned. If any one has an objection to the same do send me a mail and I shall remove all mention of their names from the note.Similarly I have cited examples from companies I have worked in whilst ensuring that I have not divulged any confidential information. If any company has an objection and would like me to remove some information do send me a mail to johnk06@gmail.com
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