Not Too Stale, Is It?

About nine months ago, July 2014, within the span of a week, both Amazon India and Flipkart got in billion-dollar-plus commitments.

Strategically, they would both have the same agenda… In the interest of scale and repeat clientele, both would have to spread their wings beyond discretionary purchases and into the most habit-forming & repeat purchase zone of shoppers a.k.a. groceries (see my write-up on how online-groceries are changing consumer behavior HERE )

Both Amazon and Flipkart would also have to follow suit, and it seemed that Flipkart would perhaps be the more aggressive one given its need to ringfence itself against a much bigger giant.

Hence, looking at that situation and trying to extrapolate how it would pan out, I had made a key suggestion on July 30th, 2014, to sell / partially sell one of our portfolio companies to Flipkart. The portfolio company was at the time vying for leadership in Mumbai’s online groceries space (now it has expanded much more).

It could have been a strategic opportunity, where the acquirer would have been an established e-commerce player buying into an online grocery start-up that had refined its act. It would have given Flipkart immediate entry into the grocery market.

But then, one can never time these things to perfection. It’s a trade-off between waiting & nurturing an investment in hope of higher value or taking an exit route when it comes. Maybe it’s still not too late. Consolidation is key in an industry where large scale sourcing, large scale operations & large scope of customer choice are big competitive advantages. Who knows?

Only New; Not New & Improved

This is a short post – largely motivated by some questions that we are asking ourselves. How do we survive in an established market which already has so many service competitors? Is our strategy wrong or are we just not trying hard enough. Maybe we should figure out what clients want and then carve out a niche for ourselves, or maybe we should only go after a particular type of client? Or maybe we can invest a bit of time and effort to create long-lasting insights that open our clients’ eyes to the possibilities of tomorrow? Yes. That last one sounds like a plan. At least we won’t be creating a host of “me-too” offerings.

It’s important that we refrain from telling our customers what they need. In fact, we should open their eyes to things that they might need in the future. Do they know what could potentially disrupt their comfortable lives? Can we become their partner in future-proofing? At the very least, we would be doing a favour to both ourselves and our clients by creating new categories, instead of fighting for market share.

Market research is good. It spouts a lot of data, is exciting for the quants, but it comes with a bias. Customer feedback will mostly be about things that customers know about and hence, all their preferences & non-preferences will be constrained by their knowledge of needs. If one were to ask the average media consumer of the ’70s and ’80s, not many would have asked for the internet or a smartphone. Or maybe 150 years ago people would have voted for faster horse-carriages instead of a car.

Similarly brand communications also need to undergo a more forward looking change. Instead of increasing their messaging frequencies, brands should work to create a higher purpose of existence. Technology is on our side. There is great fragmentation of media. Brands can really get close to customers and create tailored conversations. Brands can afford to wean themselves from preachy/informing advertising and give the stakeholders something to talk about, engage them, co-opt them, titillate them and be their friend.

India’s Tier 2: Incentivize Hidden Liquidity

I’m back from a yet another trip of one of India’s holiest cities – Allahabad – a city with deep historical and mythological underpinnings, yet fast trying to embrace modern India’s newest fads. It’s a city I grew up in and therefore I have had the chance to observe social and economic opportunities first hand. On this trip it seemed that everyone in the place was buzzing with the promised conversion to a “smart city”.

However, what could easily derail any “smart city” dream is the lack of basic necessities, infrastructure, education, growth mindset and talent drain. Sure there is enough economic growth as anecdotal evidence from local business that are proxies of consumer spending & confidence like entertainment, food, consumer goods, etc. suggest. But the growth is ad-hoc and haphazard. There has been growth in transactions and economic activity, but not HDI. I don’t think a “smart city” can be made without effecting change in fundamental mindset, infrastructure and employment dynamics .

But here’s an idea. Why can’t such mid-sized cities build an eco-system which nourishes a variety of new businesses spanning areas like social, infrastructure, education, medical, consumer, entertainment, information & media, transport, etc? Why not put the huge amounts of idle cash/hidden cash to good use by incentivizing the hoarders of such money?

The problem is that this liquidity is either invested in real estate through legal and illegal means or it is spent on consumer purchases & entertainment outside the city (typically in big cities or abroad). But hardly any of it is ploughed back to be reinvested for the good of the city.

It is my belief that such liquidity can fund a lot of new start-ups in a variety of areas – there are plenty of higher educational institutions churning out bright students. But lack of exposure to new ideas, the absence of a viable guiding platform and the fear of such cash coming under the taxman’s scanner are holding back many bright ideas. Therefore for the youth, the only way to progress is to move out of the city after graduating.

So when one can have tax amnesty schemes like voluntary disclosure of incomes, why can’t we have another such amnesty scheme which mandates the pooling of money into an fund that bankrolls new business ideas that will make a difference to the city, generate employment, discover new talent, change mindset, and truly prepare the Allahabad to usher in the “smart city” tag.

What’s Your Story? Branding For Start-ups

At the heart of all brand-building and marketing lies storytelling. But haven’t we all learned that product is the most critical of all Ps? Yes, that remains true. However, a super product with a poor storyline is as unlikely to cut much ice as is a super storyline with a poor product. Innovation in both is important. Especially when starting out and you don’t have huge marketing budgets, and are spending most of your time fund-raising, it’s important that you develop the story very carefully.

Here are some of my thoughts. Please feel free to add to these and/or suggest modifications, or some new viewpoint.

Develop A Story, Own The Conversation

Harry’s is a shaving brand that’s shaking up a market, which has rarely seen a leader past Gillette. That’s not a mean achievement, given that this industry requires constant product innovation, expensive R&D, high volume advertising.

For Harry’s it has been a case of good storytelling. They focused on giving really awesome looking products, with a strong core of message – creative, affordable & equally efficient. This is especially true when the goal is to sell and experience, whether that’s shaving or selling groceries. And when, the story is strong it reflects in every aspect of your value chain – factory shop floor to customer’s shelf.

The customer should feel compelled to talk about it. Therefore, it might be instructive to create engagement that creates conversations. These engagements can be as simple – for example: in the context of shaving, style competitions or creating a National Shaving Day after ‘Movember’. (Harry’s does the latter, but also goes the slightly expensive route of having its own salons, creating a magazine, etc)

Innovate, Innovate, Innovate

As we said in the beginning, the story should reflect in every aspect. The same should most importantly flow into the product or the service that your customer will be interacting with and taking home or coming back for more.

So if your story is creating a hub where musicians around the word can collaborate, then your entire product team’s innovation should be focused on the technology that will create the low latency, making available the easiest modes of recording, creating a pipeline that will compress and decompress data in sync with available bandwidth, etc.

Create your own space for growth. Do good, good will happen to you – take the case of Warby Parker which distributes free glasses to those in need, apart from selling quality, designer eyewear at affordable prices. It gets them huge brand equity, because there is a very unique story to tell – one that surpasses all costs of distributing those free glasses. It creates customer conversations, it creates brand innovation and it definitely creates revenue.

Create a product/service that is truly needed; not just one that will try to chase share in an already existent market.

Don’t Feel Shy of Highlighting Your Expertise

So you feel you have stumbled upon something new that the market needs? Good for you. But why is yours the only team that can do it? Maybe you might have some kickass coders, some brilliant marketers, a rainmaker from heaven, the best guy handling finances and the best VCs backing you.

So once again, please do tell your story. Don’t feel shy of telling the world how great you are. It’s a mistake that a lot of people make – they equate marketing of their individual expertise as boasting. It’s not.

Share Insights, Help People Decide

We are all here to buy and sell services/products and we all want to make informed decisions. Whether you are in the field of mobile technology or food, share your knowledge. Tell people what’s happening around the world, what are the latest improvements in technology, what are the latest trends in menu designs, why X is better than Y, or why customers should opt for Z.

Be the thought leader. Let your potential customers feel comfortable in the knowledge that you know your stuff. Let them feel sure that they are going to be investing in the right product/service.

This is not just about maintaining blogs, tweeting, or having an active Facebook page. Try to be out there at conferences, or if no one invites you, create mini audience-connect sessions of your own at the nearby café.

Ultimately, it’s about positioning your expertise in as helpful a way as possible.

Creative Execution – Flexible & Shareable

Creatively, you do need to go the entire path. The level of creative execution depends from sector to sector and story to story. Be careful about the visual identity and brand language that permeates all stages.

Communicate a single end-to-end experience. It’s very important to establish the mood in your creative execution that fits exactly the story you are trying to tell. Not any more, not any less.

Also, while crafting the creative strategy – think about the future and be careful while creating the story and positioning. You might want to add certain verticals to your business at a later date. In that case, the brand name that you choose, the logo that is designed and the communication that is drafted must leave enough leeway for the audience to connect with even your extended business line at a later date.

Needless to say, plan upfront with your agency, but keep the freedom to do something different. An elaborate storyboard might lock you into something, even if the final product is not in the right direction. That doesn’t mean you micro-manage the creative agency – some rough sketches before shoots work best but after that let their brilliance take over.

Creative content generated must be inspirational, aspirational and easily shareable. The last one is very important these days. Even your website must evoke the same emotions as your story and rest of the creative.

Lastly, of course, plan your campaign release well – media, timing, regions, etc.

What Should Uber’s Response Be?

I really don’t envy Uber’s management these days – especially the CEO and General Counsel. As in all brands, there’s a positioning game that you play for a short while by portraying yourself as a brash, fast growing, and arrogant, young company that really only cares about growth. But as a long-term, sustainable strategy it may not have enough legs – unless supported by plenty of checks and balances of, among other things, egos.

These headlines and the map (sourced from Bloomberg) will be giving the entire management some food for thought and hopefully, they will come up with a long-term measured response:

  • Uber Under Attack Around The Globe: Wall Street Journal
  • Uber Needs To Say More Than I’m Sorry: Marketplace.org
  • Uber In The Middle of A Social Media Whirlwind: Exchange4Media.com
  • Things Are Going Downhill Fast For Uber: TheDailyBeast.com
  • Uber Drivers Hit With Penalties: The West Australian
  • City of Portland Sues Uber: Forbes
  • Uber Under Pressure As More Bans & Lawsuits Loom: BBC
  • Uber’s Plot To Spy On Reporter Is Latest Controversy: USA Today
  • Chicago Police Investigating Allegations That Uber Driver Assaulted Female Customer: Chicago Tribune
  • Uber Driver In India, Accused Of Rape, Faces Other Charges: New York Times

uber

We are dealing with a company which has been valued at almost $40 billion recently. The least that the organization can do is own up to its shortcomings, raise its hands and apologize. But it should not just stop there. It should then start to clean up its act, change its business practices and very importantly, learn that each country is a different beast. In order to thrive, and not simply survive, it needs to take into account the dynamics of the host country.

It cannot be an action as farcical as British Petroleum changing its brand and logo BP.

Uber needs to invest some of that hot PE money into good crisis managers (not PR guys), especially given the pace at which it has grown. In countries like India, where there is a dearth of reliable data for its citizens, Uber must make that extra effort and invest in background checks & fix GPS trackers in cars. I’m sure it won’t cost the company even a fraction of the $1.2 billion it recently raised.

It might even be HUGE brand victory if they were to rethink their current Terms & Conditions which absolve them of any wrongdoing by the so-called “third party provider”. A protection, even a limited one, could act as a good service differentiator.

Now it’s up to the management to either get some good PR people to spin another story or to roll up their sleeves and go back to the market more humble, but equally confident & ambitious.

E-Groceries: Changing Consumer Behaviour

I recently read an article, which said, “Online grocery stores require large investments, deeper technology and complex supply chain. Hence it does not pose a wide start-up opportunity.” Since, I have had the opportunity of working very closely with some companies in this space, it set me thinking. To start with I don’t agree that this business does not pose a wide start-up opportunity. Same as in any emerging business, there are various models at work, which will get fine-tuned as time goes. But at the heart of it is achieving a change in consumer behaviour which will contribute to scale.

Yes, you need to have a strong technology backbone in order to process ordering, picking, packing & delivering, but that is not insurmountable. In many ways, technology has today become commoditized – in the sense that there are plenty of solutions that you can buy and tweak as per your requirements, or if you know a good techie or two, you can get it done on your own. And, if you are far-sighted enough you would have spent upfront on a technology that is scalable and hence requires minimal repeat spends as you grow.

At the heart of any business working or growing profitably is scale. Online grocery is no exception. But executing scale, while holding inventory, can be a stress on capital expenses. Imagine having to keep on adding warehouses at each location. The asset light model employs inventory management that procures stuff only when they have been ordered. In other words: Just-In-Time. Stock a tiny fraction of the fastest moving SKUs and pick from large wholesalers only what your current lot of orders requires. The same goes for perishables. You can instantly cut out not just warehouse cost, but also cost of large scale industrial-level air conditioning.

Supply chain is also something that is slightly more complicated in the case of an asset light model, compared to an inventory-based or offline model. But, there are ways to make it work right and it all boils down to scale. So even though you might not want to take the capital costs of the delivery infrastructure on your own books, you can sweat each inbound & outbound vehicle that much more as your scale grows. In fact, a mobile hub and spoke model is something that is being experimented with. You don’t really need to have tie-ups with offline store to be efficient. Yes, some big players are entering the market with that model, but they will have to work very hard to maintain consistent service levels across the entire network of offline stores.

While one would have to agree that most of the online grocery businesses have been city specific, these are only early days. I have no doubt that templates being set in one city are highly replicable in the next. Also, apart from the traditional arguments of overcoming inconvenience, a few of the biggest advantages of online grocery retailing are (1) Unlimited shelf space, leading to thousands of SKUs being available at no large real estate cost; (2) Ability to dynamically upsell and/or generate offers based on user profiles & past purchases; and (3) Ability to offer deliveries at any time of the day, as per the consumers’ preference (with so many double income households, late-night deliveries are now very prevalent). Yes, you have to be patient with any business in the beginning. This is a business which is disrupting consumer behaviour. In its current avatar, a lot of regular purchasers will obviously be the more savvy lot. But we’ve seen from other ecommerce models, that it didn’t take long for others to catch on.

Changing consumer behaviour was never easy, but it has always yielded good returns. Therefore, upfront costs on marketing & brand building are perhaps going to be much higher in the case of these organizations. But behaviour once changed, is tough to go back on. And when you combine that with a repeat-purchase habit like grocery shopping, it would only yield ever increasing volumes. Owning the consumer also leads to many other related revenue streams.

It’s still early days for the space. As in every emerging sector, not everyone might crack the model. But those who do would not only have made a lot of money for their investors, they would have created a completely new market. And that, to me, makes a suitable case for a start-up opportunity.

The Joy Of World Cup

Once every four years we get to witness the best sportsman that humankind has to offer, battling it out in an arena for the highest honors. No, I’m not talking about the Olympics. I’m talking about the FIFA World Cup. Yes, I’m a little biased towards football.

Anyway, the 2014 edition has seen several interesting things. For one, there was not a single draw in the first 11 games. Some of the smaller teams are playing with a lot of heart (just look at Costa Rica’s campaign opener against Uruguay). Two established names are already out of the tournament – Spain & England (However, why England’s ouster is no surprise, is something we’ll discuss in a bit). Portugal has been demolished by Germany. Chile have been playing like mountain lions rather than timid Andean llamas.

Let’s take the example of England in this edition. Their ouster has not come as much of a surprise to me. It’s a team that has consistently underperformed on the big stage for many years. They reached the last four, 24 years ago. Many mistake the vibrancy of the Premier League as being indicative of the state of English football. But the fact is that many of their good players are old. Lampard, Terry and Gerrard are possibly playing their last major international tournament. Rooney is not young anymore (at least by footballing standards). The young guns Welbeck, Sturridge and Sterling are inexperienced. Cahill and Jagielka cannot provide the fullback support that Ferdinand and Terry could. The vibrancy of the Premier League comes from the brilliant mix of foreign players (including those from other parts of the UK). Over the last many years, many stars have emerged – Henri, Ronaldo, Suarez, RVP, Giggs, Drogba, Oscar, Torres, Bale, Hazard, etc. And, by saying this I don’t mean that the Premier League should change in any form, because it provides a very solid platform for talent discovery and subjects each player (domestic and foreign) to a high level of performance.

But there are many games to follow. Brazil, Netherlands, Germany and Italy are still in it. It promises to be a very interesting 3 weeks ahead.

Is Dhoom 3 Indeed A 500 Crore Film?

Just stumbled upon a news article, as per a statement from Yash Raj Films: “Dhoom 3 continues to create history at both the Indian and Overseas Box Office. It is now officially the first Indian film to cross Rs 500 Crores Worldwide, making it the biggest motion picture event of all time!” You can read it here.

I do not refute that claim. But the numbers hide more than just a stellar movie. I would argue that it’s the inflation effect that has boosted the topline numbers for D3. You can read about higher ticket prices here.

Even if one were to assume conservatively that about 1 crore people watch an average blockbuster, priced at an average of Rs 100 per ticket, then that movie would gross about Rs 100 crore at the box office.

However, if we were to assume that movies which create a huge hype and hoopla before their launch, by burning a lot of marketing dollars, manage to raise footfalls by 1.5 times and average ticket price by 2x, then we are home. Of course, this is a simplistic calculation and one can argue pretzels around it, but the following table will illustrate this effect:

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As with any other project, it would be interesting to see the numbers at the operating level.

Facebook & LinkedIn Must Future-Proof Their Audience Demographics

Facebook must address poor traction in the 18-24 age group, else usage rates may drop sharply in a few years. Even if usage rates remain similar, it is simply leaving too much on the table for other audience aggregators to prey on (ie: share of advertising pie).

While optically LinkedIn seems to be suffering from the same issue, the argument is solid that it targets mid-career folks. However, even there LinkedIn could stand to “future-proof” itself by perhaps building upon college networks, thereby extending versatility.

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Social May Be Sexy, But Advertising Is Not Dead Yet

In my day-job, I identify and engage with organizations which are creating new conceptual businesses or redefining the market segment that they operate in. The end goal of this is to create a new leader / ‘superbrand’ in every category by virtue of investments in advertising.

However, therein lies the conundrum – is advertising alone enough to build a superbrand?

But first, let us be clear what a ‘superbrand’ is. Is it simply the brand that sells the most or advertises the most, has maximum recall? Or is it the one that sells the most without much advertising effort? Perhaps it’s the one that identifies an entire product or service category or maybe it’s merely the one that has been there, in your face, for the last dozens of years… Whatever it is – it could one or all or a mix of the parameters mentioned here – one thing is for sure; a superbrand is one that evokes a strong passion. It is a product or service that people flock to purely to see it, feel it, revel in its company, enrich their lives with it, and most of all spend a moment of their lives living it.

We are talking of winner take all markets. And these may not typically be built on the basis of advertising alone. The reason being advertising or any other above-the-line activity is practically a one-way street. You really don’t create the network externalities that are required for either mass adoption or mass reverence. The problem with depending solely on advertising is that after a point it creates dissonance. Unless a clever creative breaks the clutter, advertising alone can rarely cultivate large scale & long-term loyalty.

But yes, when you are setting out to creating a brand (with the ultimate goal of getting to be a superbrand) advertising is definitely an effective tool to encourage trials, inform people, and many of the other attendant benefits that we have all learnt in school.

However, one aspect holds true – access to deep pockets to fund high frequency & high impact advertising does create competitive barriers. It also causes competition to step up on the ad pedal themselves. But if you are the entrant with the deep pockets, you need to first sort keep your supply side geared up for bursts of new trials, you need to prime your communication to keep evolving as and when newer entrants take to the battlefield and you need build a strong dream for your stakeholders to buy in – both consumers and investors.

So yes, while many branding gurus will debate till the cows come home about the virtues of advertising vis-à-vis going social, I would say just one thing – one does not come at the cost of the other. If you are already higher up in the “branding curve”, I would say, by all means try other cost effective and viral methods of staying relevant because the marginal utility of above-the-line advertising would be very low. However, if you are an ambitious organization still in the commodity or quasi-brand level, you should perhaps start with advertising and habituate people into communicating with you on a daily basis.

What’s your view?

Tying In HR With Business Development

Human Resources is still finding its strategic bearings – especially in Indian media businesses. And till it does so, all companies will continue to suffer from mismatched skillsets with work profiles and hence, higher attrition rates.

Even as the rest of corporate India is moving ahead on this count, the HR department at most media houses remains more of a support/administrative outpost. It is because of this status that it doesn’t attract leaders who are practicing cutting edge personnel management.

In fact, HR’s role in business development is as critical as the business team’s. Talent management/sourcing along with other traditional functions like remuneration et al are important, but maybe some part of an HR team’s KRA should be tied in to the actionable outcome (ie: has the overall business grown or not).

Moreover, I feel that the HR-round of interview, which is deployed by most organizations as the first checkpoint, ends up being a formality and is sub-optimal use of resources. It may be effective in screening out junior level roles, but not when you are selecting candidates for mid-senior managerial posts. The reason is that the concerned HR person ends up mostly checking off a list of criteria without any macro/strategic outlook. So a candidate with huge strategic potential may get marginalized just because he/she doesn’t fit the boxes of “preferred experience”.

Of course, there are some other areas where there have been significant improvements in the recent past – employee training & re-skilling, addressing grievances & career counselling, among others.

Content Monetization

Monetizing content is more of an art rather than a science. That’s because content appeals to the cognitive senses of a person rather than logical and analytical. I’m sure there is an equally competent counter-view to this. One might say that entertainment content appeals to softer senses and factual content to the harder senses. But my submission is that content – whether fiction of non-fiction – is consumed from the prism of being exposed to new ideas, thoughts, being entertained and being able to absorb a fresh perspective that will enable the person to transact his/her life with peers.

So getting back to the monetization bit – Engagement and making a difference to people’s lives get you quality viewers and the same also encourages sticky content. So even though a channel may log huge GRPs week-in week-out and have a hoard of advertisers knocking on its doors, would it be better to have sharper segmentation and programming that’s amenable to engagement (ATL/BTL/Online/Offline) in order to have a more efficient spend-GRP ratio. Advertisers go back happy having reached audiences in a more meaningful way, audiences go back more enriched having been reached by content & ads in less superficial ways.

The questions to ask while creating such a marketing/positioning strategy are – What can bring about a change in consumption pattern – not only from the point of viewing/interacting with the channel, but also in the viewer’s own life choices. What can expand the advertiser pie beyond the traditional ones? Is it a wise idea to have to the same content across a spectrum of audiences on-air, online and offline?

Each content re-purposing can act as a marketing statement and each content re-purposing can help an advertiser reach a new set of audience. The sum of the parts of really engaged audiences will be larger and the probability of them buying your advertisers’ products will also be higher.

For instance, are your viewers switching channels during ad-breaks? Are they recording the programming and skipping the ads? Are they ignoring the banner ads? Yes? Can you take away the choice from them? Yes! How about digital product placements as per the nature of content re-purposing? So if your soap has a protagonist sipping a glass of water in its original version, a digital edit for on-air purpose can have him sipping a glass of Coke, a re-purposed clip on your Facebook feed can have him drinking Sprite or Red Bull… The choice is limitless and the technology is available.

This is very different from traditional product placements in that editors can drop whatever they like, wherever they like, into programmes or films during post-production.

Digital placement firm MirriAd is cashing in on this trend. To quote Mark Popkiewicz in a recent BBC article (full details here): “These are not just logos, they can be video, signage and products, even cars… When brands are integrated they are placed in such a way so it is clear to the audience that they were always there and are part of the scene. For example beverages are placed as open cans or bottles with glasses containing the beverage alongside – that way they look like they are being consumed… The technology is capable of placing or replacing moving objects and even replacing products being handled by actors like mobile phones… Early trials show almost double the engagements of traditional campaigns… This is because when a consumer watches a show they are not defensive against advertising as they might be with advertising online or commercials on TV – they are in receive mode and are not blocking.”

This is just one of the strategies that one can use. Similarly, there are umpteen things that can be done to increase engagement offline, serve up content at places where your target audience socialize, constantly contextualize content as per changing trends, etc. What are your views? Eager to hear them!

How To Build Businesses Out Of Thin Air?

Can a business be built on bare-bones capital requirement, yet is profitable, scalable and captures emerging trends?

Many companies have been able to do so – at least in the initial stages (think any of the dotcoms that have today become huge valuation games). But once they grow out of the initial stages, the costs start catching up. Conversely, there are equal examples of companies that have incurred high initial costs (even for many years) but have now evolved high margin business units that practically run large annuity businesses with almost all if being free cash flow (think of the Disneys, Virgins and luxury brands).

One such business philosophy that comes to mind is brand licensing. First, you need to have a strong trend to capitalize on; one which will change consumption patterns. Next, you should have the ability to incur an initial period of high costs related to brand creation, brand establishment, product making, distribution, etc. However, once the brand saliency has been established in the market, the capital costs can be cut drastically and the brand could be extended both horizontally and vertically.

This way, the risk of manufacturing, selling and marketing rests with the licensee, and the licensor can earn steady cash flow. But one needs to ensure that the brand is being extended into correct categories & price points, that the licensee’s ethos matches that of the licensor and that the investment in marketing & branding continues unabated.

There are many attendant intricacies, but I shall leave those for another day. For now, I need to go to the drawing board and see if I can rustle up a viable plan.

Fundamentals Of A Good Business Plan

In my line of work, clients, business partners and prospects often ask me what a good business plan looks like. I don’t have a straight answer to that because each business, each category and each industry has its own idiosyncrasies and it’s hard for me to generalize. I’m sure that I could offer a standardized answer if I put my mind to it, but I like to feel my way into engagements rather than check off items on an objective list of things-to-be-done.

My work is a delightful mix of business development, strategy consulting, category creation, market expansion, brand management, forging partnerships, financial analysis, and portfolio management. All of it becomes even more exciting given that I am not constrained by any sectors. Hence, my belief in co-creating businesses by fusing my lateral experiences with the vision & mission of the entrepreneur.

Very often the most basic issue with business plans is that owners fall in love with their product and/or ideas so much that they fail to justify the existence of the business from the prism of an investor. And that’s very crucial. There’s nothing wrong in really believing in your business, but one should always strive to answer a few critical questions:

What unmet needs are being addressed? Why now? And, what is really different?

There are many I’ve met who believe that their product/service is the best or first of its kind or not replicable. But what is the main customer pain point that you are addressing and is the time ripe for it? Many businesses die an early death simply because they are ahead of their times, or because an ecosystem to support the business or expand the market has not matured adequately. For instance, online grocery shopping may not have worked in India five years ago, but today with technology, logistics, payment mechanisms in place it seems to be a viable method.

However, the toughest part, and the one that requires maximum attention, is to identify the one or two strongest customer propositions. This is what defines your business in the market place; this is what your entire business strategy will be based on; this is what each and every employee in the organization will align towards.

Do you understand the chosen industry and competitors well?

Are you trying to be an entrepreneur because it’s sexy to be one, or are you entering this having done the necessary research? Passion is important, but that alone doesn’t pay the bills. It goes without saying that unless you do understand the forces at play, the outcome will at best be mediocre. Will you be able to both open up a new market/category and sustain market share? Or will you be the guy who opens the market, educates the audience, only to see others with deep pockets rush in and edge you out?

What are the key factors that will keep the business in business?

You obviously know where the revenues will come from and may have even formed very scientific assumptions to predict future revenues & costs, but you might have to consider every tangible and intangible aspect that will keep you going. You need to be adaptable to evolving needs; in fact you should be able to proactively cause people to change their needs & habits. That’s a very important skill. For example, if you are a healthcare company, are you going to choose only the unwell as your target client, or do you want to inculcate a habit of regular check-ups among the larger population and thereby create a much larger catchment area for yourself. Similarly, you should be aware of how government policies can affect you, what wind is blowing politically and how that could shape the policy environment. Is your universe of target audience expanding or shrinking; and what adjacencies to explore?

Do you understand your potential investor?

The potential investor is probably reviewing several plans simultaneously. She/he may not have the time to do detailed research on the businesses at this early a stage. So try to present her/him with as many relevant information nuggets as possible, with due reference. If you are presenting a certain market size & dynamics and you got the numbers from Report XYZ; please do mention – after all you don’t want anyone to think that those numbers were pulled out of thin air. Tell the investor why you are the right person to back, who are the others that take decisions in your company and what are their backgrounds. Support your financial projections with rational assumptions and go into as much detail as possible.

And don’t forget the most important aspect that any potential investor looks at – a successful exit. Every investor will want to engage with a player who has a definite plan to provide an exit – whether through buybacks, IPO, trade sale. So it comes to 3 things: Ability to Scale, Ability to Execute and Ability to Exit.

The list can go on, but the fact is that a well-researched business plan, that showcases the entrepreneur’s passion and gumption, always wins. The trick is to tell a compelling story, grounded in rationality, which excites everyone!

What Job Does Your Content Do?

We as humans like to optimize the utilization of our time. That could mean catching up on news on your mobile phone while commuting or watching a game on your tablet or buying a book of short stories because you feel you don’t have much time or even taking a nap on your way back from work. It is these “jobs to be done” that cause folks to look for a solution, and when they find one, they buy it or hire its services.

This is relevant for content businesses. How is the consumption pattern of viewers/readers changing with evolving technology? Let’s take the example of television– for a large portion of Indian population this is still the first port of call, but that’s fast changing as smartphones make deeper inroads and feature phones get smarter, or even as the number of available channels swells. In a household where the TV is being shared by at least 4 other members of the family, mastering the nuances of programming is of paramount importance for a television station.

For example, news in India is consumed more by adult male audiences and it therefore might make sense for news channels to target such a viewer at a time when he has higher chances access to the TV. Because let’s face it, prime time news at 9 pm often loses out to the entertainment demands of the rest of the family. Maybe news prime time should be shifted either before or after the entertainment one.

Breakfast programming, which is a well-established genre overseas, is only picking up in India. And to my mind, this could be a good way to address a “job to be done” by helping arm people, stepping out for their workday, with all the information they could need – their choice of information could differ, but that’s why we have so many different channels.

So is the need to address the new age viewer through different delivery platforms and re-purpose the content for that. In simpler words, can a news nugget that’s 2-3 minutes long be delivered via mobile apps and social media links, every few hours?  That addresses the “job to be done” as well as ability to complete that job with as little hassle and commitment as possible. If a channel can reach out to more people more often and help them fulfill their need for a quick doze of information, I bet the effort would be worth it.

Interestingly, the entertainment industry addresses this very seamlessly, where they make short capsules of soap episodes.

So instead of channels fighting fierce battles to gain rating points, there could be a way to garner market share through co-option & co-creation. In short, look at what is the job that your content needs to do in order to enrich the viewer’s life. Because contrary to what market research tries to justify, humans are complex creatures who don’t necessarily watch a particular television channel just because they happen to be a certain age, working in a certain industry and belonging to a certain socio-economic class.

It may not be a “winner take all” scenario, but the increase in the pie size would compensate for that. For more on “jobs to be done”, go here.

United We Stand

Forbes magazine has valued the Red Devils Manchester United at an Enterprise Value of over $3 billion dollars ($3.3 billion to be precise or Rs 18,150 crore). That’s quite a neat sum! The first sporting club to have done so and that too by a wide margin: The next one in line – Dallas Cowboys – is a distant second by a margin of over a billion dollars.

Even the latest Deloitte report places Manchester United third in its Money League (behind Real Madrid & Barcelona), with a revenue of 320 million pounds (roughly $500 million) during the 2011-12 season – holding steady versus last season. The above achievements have been reached in a season / year in which Manchester United lost out to the Premier League title by a whisker, and got knocked out of the UEFA Champions League & FA Cup early. Predictably, broadcast revenue did fall by 11%. Therefore, it would be instructive to look at what is right.

Football is a major source of entertainment. Folks play it, flock to the stadium in droves to watch games, bet on matches, create anthems & songs for their teams, buy shirts & merchandise, play video games based on it, watch it on TV, make films – to name a few. So in the end a football club is in the business of creating good content for its fans week in week out. That exactly is the ethos of Manchester United – to entertain; and it takes that responsibility very seriously.

The approach is one of managing a professional organization, rather than just a sporting club. The club curtails wasteful use of money in the transfer market through the use of analytics & research and instead redirects that towards wages, which seem to bear a better correlation to victories (as per data in Soccernomics by Simon Kuper & Stefan Szymanski). It has also managed to increase player longevity, cultivate talent in their academy, blend youth and experience (buying players who may be considered too old by others eg: Van Persie who came to ManU at the age of 29) and maintain consistent management under Sir Alex.

On the business front too, it has taken several new steps. On 22nd of January Manchester United, according to a Marketwatch.com report, announced the acquisition of BskyB’s 1/3rd minority stake in Manchester United Television making the television station a wholly owned subsidiary. This enables MUTV to own 100% of the content production and distribution capabilities of this business. This means greater control over the entire value chain.

Further in a bid to de-risk stadium collections, Manchester United has improved its commercial operations. The revenue in this category has not only risen 14%, but has also become the largest contributor to the club’s total. Some examples of increased commercial activity are the DHL training kit deal, regional partnerships in new media & mobile, a 3-year sponsorship with China Construction Bank to produce Manchester United branded credit cards, a 3-year deal with Chinese soft drinks maker Wahaha as the first Official Soft Drinks Partner in China, and a 3.5-year sponsorship deal with Indonesian tyre maker Multistrada. (info source: Deloitte report + internet search)

In a world where fans have other means of entertainment & occupation through increasing connectivity, it is imperative that one stays relevant across as many touch-points as possible. Whether that means creating signature cafes and bars, selling t-shirts & memorabilia, or engaging enthusiasts in ground activities & gaming contests – the choice is that of the sporting club. So is the choice it makes in approaching its business: Dispelling old notions of shunning hard-nosed business or embracing new paradigms of data, research & business, while not compromising on core ethos.

Insights on Business