Archive for January, 2011
January 31st, 2011 by Stephen Huie under Incredible India. 2 Comments.
10 DAYS POST
There’s a lot to reflect upon in this trip. The experience not only gave me a point of reference to think about India as a source (of talent and innovation) and as a mass market, but also allowed me to apply what I learned during my first semester at Smith to real businesses (especially in regards to Human Capital Management). Touring GE’s campus and listening to IBM helped me understand the service direction a lot of innovation is heading towards. Walking around the city also gave me the chance to think about the opportunities to develop products that produce social value.
I had a great time in India and I’m grateful to everyone who followed the blog (although you should keep following to check out what we do at Smith during the school year) and supported me during the trip – and a special shoutout to my classmate Darshan for really encouraging me to go.
Finally, here are some random notes that don’t belong anywhere else. Dhanyavad.
Relaxing on the Rooftop. Source: Ken Chen
- Having tea with the Goan farmer and his granddaughters on their porch
- Eating dinner on a rooftop in Udaipur and watching the sunset of Lake Pichola
- Wandering around Delhi
- Wandering around Udaipur
- Wandering around Mumbai
Observations involving Consumer Product Goods
I paid a lot of attention to the retailing while I was in India. Besides what I learned from our interactions with SPAR Solutions and Mr. Gopalakrishnan from Tata, I also made these observations:
- The items that get the most visibility are packaged in bags and hung outside of the shops of small vendors. Everything else is behind the “counter.” The only thing shoppers can see from a distance or touch are the hanging bags outside the shops. Most of the time, these bags are chips. FritoLays (a division of Pepsico) is ubiquitous.
- Cookies (if they are stocked) are always in the back behind the shopkeeper or they may be in a glass display case that doubles as the transaction counter. Cereals are always stocked in the back, but usually on a high shelf.
- Chips, not cookies are the main packaged snack in stores on the street.
- In Goa, young children would carry around sacks of packaged cookies and chips for R 10. These packages were ~1/2 the size of the kind sold at street shop retailers. I didn’t see these sizes sold anywhere else.
- Aquafina water has a special screw cap in which the bottom portin of the safety seal also detatches from the bottle. I presume that this is a design meant to deter people who would take used water bottles filled with tap water for resale (I have read that this has been a common common scheme). Without close inspection, it is difficult to discern that a bottle has been opened previously (the cap and the seal look pretty close together and you need to feel the snap of the plastic). This Aquafina design forces the safety seal to be taken off with the cap.
- Most of the bottle water I bought had a printed manufacturing date of no more than two weeks prior. This indicates that vendors turnover the product fairly quickly and that distribution channels are relatively close at hand. In a US grocery store, the date is sometimes 6+ months in the past because US stores are generally larger in size and hold more inventory at a time.
- I was told by our driver in Goa that roadside vendors usually take responsibility for picking up their own goods from wholesalers. A week’s worth of inventory might cost R 5,o00 (~$115). In contrast, a thali lunch on the street would cost R 30 – R 50.
- I was told by someone we met that the reason Kraft Foods failed to succesfully introduce Tang was that Kraft did not understand that Indian shoppers want their food and drink to be as “fresh” as possible. As a powdered drink that was marketed as a premium product, Indians did not feel they were getting adequate value for the price. Given that many Indians don’t fully trust their own tap water sources, I would have been personally surprised if Tang did well.
Gift for Goa
Also, I got the farmer with who I had chai a set of San Francisco t-shirts for himself and his granddaughters and some chocolate for the rest of the family. Unfortunately, the shipping expense will be as much the cost of the goods themselves.
January 21st, 2011 by Stephen Huie under Incredible India. No Comments.
DAYS 16 and 17
Mumbai on Foot
Sugar Cane Juice!!! - All frothy, the way I like it! ..... I checked out what the vendor did with my cup afterwards....luckily, he seemed to put it to the side away from the "fresh cups"... Source: Stephen Huie
After visiting the Tata Group, I wandered around Mumbai for a few hours. Now that our corporate meetings were done, I felt at liberty to take more risks with my gastrointestinal well-being. I started with sugar cane juice, which I had been craving since I saw the vendors in Goa.
Behind the thali cart, men grind flour and make chapati. Source: Stephen Huie
I also had a thali of rice, chicken, and chapati from a street vendor who dipped his bare hands into a large water basin to scoop out the rice. There were a few people around this man’s cart so I thought it would be a good bet, and it was, although I wish I had tried the fish too.
These cafe stops also gave me a chance to sit and write last minute postcards. Source: Stephen Huie
I also drank coffee at a series of cafes (four of them) because I was looking for the stainless steel dhabara often used to serve filter coffee in South India. I tried explaining in Marathi what I was looking for. Although I didn’t explain well enough, I did get invited into the kitchen of one of the cafes. The waiters showed me a HUGE metal coffee filter that was at least 20 gallons in volume…..
Studies show that competitor density may increase profits for each individual business. On the one hand, competitor proximity lowers prices; on the other hand, increased customer traffic (less costly for customers to shop around) increases volumes and allows each business to focus on another form of competitive advantage. Jewlery, flower, and wholesale clothing districts are other successful examples. Source: Stephen Huie
I wandered around and walked through a neighborhood dedicated to xerox copying, which gradually turned into a machine shop and machine repair neighborhood.
Many people (mostly men) stand outside the exchange to watch the scrolling marquee. Source: Stephen Huie
Before I knew it, I was standing underneath the Bombay Stock Exchange!!! I kept walking and passed the Bombay Dockyard. I saw a paan vendor and spent about twenty minutes sitting, chewing, and watching people pass by. Then, I walked to Colaba, a large retail shopping neighborhood, where unfortunately, I did not find a set of dhabara (I should have done this in Bengaluru, but we didn’t have any recreational time).
It was a relaxing adventure to close out my trip.
Final Group Meeting
Smith India Global Study Class 2011. Source: Unknown
The next day, our class met in the hotel and we shared our reflections and what we learned. We also presented business ideas that the trip inspired. It was a fun and intense time with my classmates.
I left from Mumbai that night….after a (literally) three hour ride to the airport squished in the backseat of a taxi…..
I’m happy to go home, but I’ll definitely come back.
January 21st, 2011 by Stephen Huie under Incredible India. No Comments.
DAYS 16 & 17
We weren’t allowed to take pictures at Bombay House, but it makes the most sense for me to write about all the Tata interactions we had in one go, so….here we go!
I’ll update with the recreational/tourist activities later.
Two Full Days of Tata Lovin’
Tata created a uniform brand image in the early 1990s but retained its confederatory structure. Source: Tata Group
Before I can jump into our final company visits, a little background might be helpful.
Founded in 1868, the Tata Group is one of India’s oldest business houses. It is a wide ranging conglomerate (steel, Jaguar, Land Rover, consulting, tea, chemicals, energy, telecomm, hospitality) that has become one of the most recognizable brand names in India.
The company is built like a family tree (turn the traditional organizational treeupside down) and the difference is more than just semantic or visual. In contrast to most conglomerates that issue direct orders to its business units, the Tata Group maintains a relatively lassiez faire approach.
Called a “flotilla of ships, each with its own captain” by Tata Sons Executive Director R. Gopalakrishnan, the Group is more akin to a loose confederation than a directed conglomerate. Tata Sons acts as the holding company for the group, owning up to 49% of each subsidiary (the remainder of equities are privately owned or publicly traded).
Tata Sons issues frameworks about how the subsidiaries should operate their businesses and leave strategic and operational decisions to the subsidiaries themselves. For example, during a corporate restructuring in 1990, Tata Sons organized all of the subsidiaries to adopt a uniform brand image. All Tata companies must also submit to the same annual quality and management reviews.
Gopalakrisnan likened this model to a patriarch issuing rules of living to his family. Tata contends that this model frees subsidiaries from the outside pressure of the parent company and forces them to take a long term view of their own businesses.
Tata Sons is not publicly listed for trading: 66% is owned by 17 philanthropic trusts started by the Tata family, 18% by corporate stakeholders, 13% by Tata subsidiaries, and 3% by individuals. As a result, millions of profits are directed to charity by the Group each year.
Tata’s founder, Jamsedji Tata is credited with saying that “In a free enterprise, the community is not just another stakeholder in teh business but in fact the very purpose of its existence.”
Tata Quality Management Services
On my penultimate day in India, we visited Bombay House, the headquarters of the Tata Group, and met with Sunil Sinha, the COO of Tata Quality Management Services. BusinessWeek named Sinha one of the World’s Top 50 Innovators.
In addition to Tata’s brand unification and refocus on seven core sectors, the 1990s also saw the introduction of its Tata Business Excellence Model (TBEM). Tata decided that it would sell off any subsidiary that could not: 1) double its sales in 3 years and 2) double its profits in 5 years.
To measure this undertaking, Tata created a new subsidiary called Tata Quality Management Services to send trained assessors to grade other subsidiaries. TBEM measured across six components:
- Strategic Planning
- Customer and Market Focus
- Workforce Focus
- Process Management and
Each subsidiary must produce a 75 page study every year detailing their performance against TBEM. The standards are appearantly quite high. To receive the highest grade (Tata Quality Award), a subsidiary must score greater than or equal to 600/1,000 points. Only 10 out of 100 Tata companies have received this award. The root of the improvements are in the areas of customer service; innovation; and execution.
Previous attitudes toward customers described as “TDC: Technically Disguised Contempt” were turned around at sales and support levels. TBEM awarded innovation and smart risk taking – for example, there is a yearly award for the best failed innovation. Implementation lag periods were also shortened.
Tata Steel – Mergers and Acquisitions
We also met with N.K. Misra, the head of M&A for Tata Steel. Founded in 1907, Tata Steel went from 1 ton production capacity in 1947 to 24 tons of capacity in 2008. Their goal is to break 50 ton capacity by 2015.
Acquisition (in other countries) is important to Tata Steel because trade barriers have raised the price of production.
Because of Tata’s lassiez faire orientation toward its subsidiaries, acquired companies often continue to keep their own management. Advocating a partnership model over a full integrative acquisition, Misra said that usually only two Indian representatives are placed in acquired companies. The point of the acquisition, he said, is to acquire market position and top management. However, the acquired unit must still submit to TEBM. Misra said that ethics and “the language of excellence” must be common in order effectively manage change.
Eventually, Tata may try to introduce its brand name into acquired firms that are not involved in consumer products. However, for now, they definitely plan on leaving brands such as Land Rover and Jaguar alone because they would otherwise be cannibalizing the current brand equity for a net loss.
Misra also provided some interesting insight into competition with China:
- Chinese steel production is not a proximate threat to Tata Steel because: 1) the cost of production in China is still high and 2) China must import most of its iron ore. In contrast, 80% of Indian steel is produced with Indian ore.
- However, China does pose a downstream threat vis-a-vis finished goods. For example, Chinese companies are creating joint ventures in other countries to produce galvanized steel. Unfortunately, the Chinese government restricts acquisitions. Tata Steel is moving into galvanized steel and other value-added products.
Tata Sons – An Excellent Send Off
On our final day in India, we discussed what we had learned, how our perspectives have changed, and we presented business ideas inspired by the opportunities we identified in India.
We also had a surprise visit from Mr. R. Gopalakrishnan, the Executive Director of Tata Sons, the holding company for all Tata companies. Gopalakrishnan is also the author of two management books, The Case of the Bonsai Manager and When the Penny Drops.
Himself a rather avuncular and charismatic figure, Gopalakrishnan really drove home the self-styled family ethos of Tata. Describing Tata as a “modern extended family,” he said that the father tells his children “what not to do – not what to do.”
Gopalakrishnan also said that Tata is extremely well positioned in brand management for the next few years. In the wake of the 2008 world financial crisis, “the world is desperately looking for trust in business.” Tata fits that mold, which he referred to as “Firms of Endearment,” well.
Gopalakrishnan further explicated that Tata aims to be a top company like GE or Mitsubishi, but above all, “wherever we are, should want to be respected and loved.” Whereas many considered this aspiration “fuddy duddy” and “old fashioned” five years ago he said, now, “we are [called] forward thinking.”
“You want to be loved by the society you’re working with,” he said, pointing out that members of the public sent money to the Tata Hotel group after the 2008 terrorist attacks in Mumbai damaged Tata’s Taj Mahal hotel and killed staff and guests. Tata sent the money back (they have insurance coverage), but much the money was sent back again saying to take it anyways. Tata set the funds aside to create a survivors trust fund for all the victims (including those not affiliated with the hotel) of the attack.
Gopalakrishnan also had a lot to say about the retail sector in India. Having worked at Unilever for many years, he observed India has put the cart before the horse when it comes to retail. In contrast to the US where “organized modern retail” (i.e. concentrated malls with parking lots) developed alongside infrastructure growth in 50s-70s, firms have tried to implement the same models without the same infrastructure. The result is a failure of distribution that presents huge challenges for CPG and retail firms.
January 19th, 2011 by Stephen Huie under Economics, Incredible India. No Comments.
A view of posh Malabar Hill looking across Back Bay from Marine Drive. Source: Stephen Huie
After arriving from Bengaluru yesterday evening, we got a good night’s rest at our hotel in Delhi on Cuffe Parade. We hopped on the bus and cruised down Marine Drive, passing fishing villages, parks, and condos. We crossed over the Bandra-Worli Sea Link Bridge, which connects to the western suburb of Bandra and to which new lanes were still being added.
The Asian Heart Institute in Bandra suburb is one of the premier destinations in the world for heart surgery. Health tourism revenue in India is estimated at $17 billion per year. Source: Stephen Huie
En route, we passed a lot of contradictions and contrasts. At the base of condos and new developments were communities of tin roof tin and walled houses. Across from the ritzy condos of Malabar Hill were fishing villages where people lived in the hulls of beached boats. While the proximity was not uncommon in any of the other places I’ve seen in India or other countries, the size and number of them made the visible inequality appear an an entirely new and larger scale.
Dense developments like the one in the background in Bandra encroach more closely on older less dense housing. Source: Stephen Huie
Ziqitza Health Care Services (a.k.a. 1298): Bumpy Journey and Amazing Startup
1298 Yellow Ambulances look much more reliable than hearse cars. Source: Stephen Huie
We arrived in the suburb of Bandra to meet at the headquarters of Ziqitza Health Care Services, a private ambulance firm co-founded by Smith MBA alumnus Naresh Jain.
Jain and three other Indian management professionals had befriended each other while studying the US and were inspired by a series of events to start an ambulance company in Mumbai. Two of the friends’ mothers – one living in India and one living in the US – needed emergency transportation to the hospital and had two very different experiences. The Mumbai mother was stuck in traffic and did not receive adequate medical service en route while the US mother was more expediently moved to the hospital.
The two events were a wake up call to the friends who recognized other issues with the demand for and supply of emergency medical care in India:
- The Indian average is 16 vehicular accidents per 1,000 vehicles per year whereas the global average is 0.75 vehicular accidents per 1,000 vehicles per year.
- Heart disease is the #1 killer of Indians
- India is vulnerable to large scale disasters: earthquake; heatwaves; tsunamis; floods; and cyclones.
- Culturally Indians learn not to trust ambulances and that they will not arrive on time. It also doesn’t bode well that many ambulances are actually hearses to carry dead bodies. Many Indians would rather pay a taxi to take them to the hospital than wait for an ambulance.
- Indian traffic…..I don’t think I have to say any more…..
- Not enough Emergency Medical Technicians relative to doctors.
In 2004, the friends decided to start Ziqitza (a combination of the sanskrit chikitsa (medical treatment) and zigyasa (the quest for knowledge)) and the 1298 ambulance service.
1298 is built around a cross-subsidy pricing model. Clients (or their friends/family) that request to be sent to a public hospital pay a low-tier rate. Clients that request to be sent to a relatively better quality and more expensive private hospital pay a high-tier rate. The key to this pricing model is that the clients self-select what product they want to pay (can anyone say second degree price discrimination?).
The founders built partnerships with internationally recognized medical institutions to develop their technical and organizational expertise. Ziqitza has built certified EMT training programs with the London Ambulance Services, New York Presbyterian Hospital, and the American Heart Association, among others.
1298 runs decentralized operation and call centers using GPS tracking overlaid on Google Earth. When power goes out in one center, calls can be rerouted to another. It also provides advertising space on its vehicles to companies that it deems socially responsible (including Tata and AIG).
Over time, the friends became full time leadership positions at Ziqitza and left their corporate jobs at GE Plastics, Reliance, and the Aditya Birla Group. Ziqitza has been featured in numerous articles (including a Columbia business case) and has received many awards. In 2007, the Acumen Fund invested $1.5 million in 1298. By 2008, 1298 became cash flow positive.
After a few years, Ziqitza had gained sufficient experience and reputation to bid for state-wide public amublance operating contracts (called 108), which last for five years. Their main revenue now comes from government contracts with Bihar and Rajasthan. These services are free to people (government service notwithstanding, the cross-subsidy model would never work in rural areas because there aren’t enough high income people to subsidize the poor). Ziqitza also operates Mobile Health Units to conduct physicals in rural areas.
Income from Ziqitza’s for-profit operations subsidize womens and seniors telephone helplines. They plan to operate 500 1298 ambulances in Mumbai and Kerala by Mar. 2011. Their goal is to have 2,000 ambulances by 2030.
Some of the really interesting points from our meeting:
- Scaling up is different from starting a business
- Financial sustainability is not only important for investors and partners, but also for staff, who want the security of knowing their company and job will still exist
- Despite being a private company, Ziqitza publishes its financial statements so that it can become more transparent
- The “number one challenge” has been government interaction. For example, the state of Bihar was once 4 months behind on its payments. Fighting corruption is also difficult (see following two points)
- Ethical standards are important and living by them is difficult. A government official at the Telecommunications Ministry would only give them the number they requested (they originally wanted 1299) in exchange for a 5 lakh rupee bribe ($12,000). Ziqitza refused and after causing a fuss eventually got the number 1298.
- In another ethical snafu, Ziqitza refused to offer bribes for state contracts. Former Satyam CEO Ramalinga Raju allegedly paid three times the bid in bribes to secure contracts for his ambulance firm. Ziqitza took the case to state court and the court ordered new tender bids, from which Ziqitza won two bids.
- 1298 does not receive compensation from private hospitals for bringing patients there
- Collection of payment for 1298 service is not that difficult. The alternative for most people is hiring a taxi so most people already have money on them. Callers are told the cost over the phone.
- Similar to the US, 85% of revenues are from patient transfers between hospitals and only 15% are from actual emergency transporatation
- 1298 offers higher quality and higher profit margins and has become a niche service. In contrast, the public 108 contract provides higher revenue but lower profit margins.
- 1298’s price per km is R50 per km on average. Its transportation cost is R500-700 per trip. In contrast, a taxi is about R15 per km.
- Ziqitza’s first round valuation was $1.5M. Second round valuation was $70M and included investors such as HDFC, IDFC, India Value Fund Advisors, and the principles of those funds. Among its current owners is Ziqitza’s competitor who is trying to move into the Indian market, American Medical Response (10%).
More Mumbai….in Pictures
We spent the rest of the day siteseeing:
Dhobi Ghat is where generations of Dhobi jati (occupational caste) have washed clothes. They slam clothes on hard rock, wring them out, and put them to dry in complex organization. Although clothes washing is generally considered women's work, only male Dhobis do the washing for clients because it is considered their job. Presumably, Dhobi women wash clothes for their own families. Source: Stephen Huie
Cricketers playing on the quad underneath the Rajabai Clock Tower of the University of Mumbai. Source: Stephen Huie
We had lunch at the Leopold Cafe, which has been a hangout for Westerners since 1871. During the 2008 Mumbai Attacks, the gunmen attacked the Leopold among many other sites. You can still see bullet holes in the wall. Source: Stephen Huie
The Gateway of India, across from the Tata Group's original Taj Mahal Hotel, was built to commemorate the arrival of King George V and Queen Mary in 1911. When the British left India in 1948, their last remaining troops passed through the Gateway. Source: Stephen Huie
Mani Bhavan is the house where Gandhi lived when he was in Mumbai. This was also his organizing headquarters. The library on the ground floor is filled with his books. Upstairs are original documents of his correspondence to world leaders (as far as I know, they never bothered to send a reply) including Adolf Hitler and Winston Churchill. Martin Luther King visited Mani Bhavan in the 1950s and Barack Obama visited 2010. Source: Stephen Huie
January 18th, 2011 by Stephen Huie under Incredible India. 4 Comments.
Today, we met with two firms at different ends of the cap size spectrum: IBM and EduMetry.
IBM – Developing a Smarter Planet through Service Science
Dr. Manish Gupta, the head of IBM Research India came to talk with us about how IBM is leveraging India as both a source and as a market. IBM India is the number one service provider in the country (followed by Infosys). Its facilities and engineers (mostly Indian) and researchers (Ph.Ds drawn from India and all around the world) develop basic research for future commercialization.
He also introduced a concept which is new to me: service science. Decades ago, IBM introduced “computer science” by developing hardware and software platforms and encouraging the study of computers as an academic and technical discipline. Now, IBM is developing service science – the application of technical solutions to improve services processes – at the applied and academic levels.
For example, a network of sensors would record traffic density and flow and send that data to an optimization algorithm that would regulate traffic or recommend human action (IBM will be piloting such a project this year in Ho Chi Minh City, Vietnam using people’s cell phones as an audio sensor to detect traffic patterns).
Another good example is IBM’s Spoken Web platform using Hyper Speech Transfer Protocol (HSTP as opposed to Hyper Text Transfer Protocol), which was developed in India. Spoken Web uses cell phones to move from one voice message to the next with the ability to link from one recording to the next and to record transactions. This may help fill the digital divide in places like rural India where low literacy levels are still a problem and people are more used to processing information through speech and hearing than through reading text.
IBM deployed Spoken Web in a small town. People used the service for business purposes (e.g. advertise labor services) and knowledge sharing (e.g. farmers ask questions about best practices). The testors created other novel uses: matrimonial ads (some of which were followed by response saying that the person was not a good marriage prospect) and social networks (a recording of a child’s first words so that distant relatives could call in and hear the audio themselves).
Most interesting points:
- In a world economy of $54 trillion, up to $15 trillion is lost in inefficiencies, of which $4 trillion may be salvegeable. IBM’s goal is to recoup these inefficiences through service science.
- The confluence of three trends creates the opportunity for a Smarter Planet: Instrumentation; Interconnectedness; and Intelligence. More and more instruments are available to measure and regulate systems (in 2010, 1 billion transistors were produced for every single person on the planet). Communication is improving with the expansion of access to the internet and mobile phones (in emerging markets, the latter is growing more quickly than the former). Instrumentation and Interconnectedness together allow for the tracking of real time information, which in turn creates opportunities to respond quickly and accurately.
- The Smarter Planet concept is articulated through three phases/platforms: Measurement (sensors and imaging); Modeling (data cleaning, simulation, and prediction; and Control (regulation and adjustment)
- Solutions must be developed for specific localities. For example, the traffic sensors used in Sweden are set up for drivers who drive within their lanes. In contrast, Indian or Vietnamese drivers are driving half way in the lane, cutting across, or even going in the wrong direction.
- Build acceptability among people by talking about the solution and not the technology. I found this point to be especially important for a market like the United States where the boundary of personal privacy is rigorously defended. I don’t expect US consumers to be keen on allowing a third party application to allow the microphone of their cellphone to be constantly on and recording.
- There still isn’t any way besides learning from mistakes to avoid the inefficiencies created by tail-end risk outcomes (think about the 2010 Flash Crash).
- The challenge to service innovation is creating the business model. How do you figure out who pays for what and where the money will come from. This is espcially problematic when working with partners. For example, the Spoken Web platform requires cooperation from cell phone providers. Figuring out who will own the intellectual property and who will be responsible for what slows down the pace of technological deployment.
- The most important step to managing your partners is choosing the right partner.
- Playful projects like the chess playing Deep Blue or the Jeopardy playing Watson provide critical empirical evidence for the continued development of logic and inference programming.
We also got a management perspective from IBM India’s Rajesh Agarwal, the Indian head of Global Supply Chain and Advanced Analytics. Important points from him:
- Delivery Transformation has three sequential goals: 1) Secure Delivery Stabilization (root cause analysis, redesign, training); 2) Customer Satisfaction (first call resolution, issue identification, analysis of customer assistance data); and 3) Reduce Service Delivery Costs (human talent, labor arbitrage)
- Unfortunately, many project managers think that their power is directly proportional to the size of their team. Instead, small teams that can do the same work are better than large teams.
- Managers can’t transform people. Mangers can only incrementally change people. People have to want to change themselves.
Discussing HR and Growth Opportunities with EduMetry's Ravi Bangari. Source: Stephen Huie
EduMetry is a five year old company that provides outsourcing services for teachers who need papers graded with feedback. Their goal is to increase teacher productivity while providing meaningful feedback on student papers. They work with teachers and institutions to develop an end-to-end assessment framework based on the client’s rubrics. EduMetry’s clients are universities and community colleges. EduMetry was recently featured in a controversial article in the Chronicle of Higher Education. We met with Ravi Bangari, VP of Assessment Operations. Most interesting points:
- Largest challenge is proving that Indian outsourcing staff can understand and comprehend abstract cultural writing by US students.
- Potential growth in US K-12 market and for-profit US colleges
- Interestingly, only recently begun considering Indian schools as a client; I suspect pricing/budget availability may be a factor in this
- Mostly staffed by part-time employees who take on piece-work. Many of these employees are university adjunct faculty, some of them from the US.
- The HR challenge is training, developing, and engaging a primarily part-time workforce whose training is in specific knowledge sectors and who are not really trained in developing EduMetry as a firm. Transfering learnings from these staff is important.
January 17th, 2011 by Stephen Huie under Incredible India, Information Technology. No Comments.
DAYS 12 and 13
SPAR Solutions and “Orchestrating Visability”
Small shops like this general store for consumer packaged goods make up the majority of Indian retail. Source: Stephen Huie
On our last day in Delhi, we had lunch with Sandeep Verma, CEO of SPAR Solutions. SPAR Solutions lubricates the retail sector by ensuring the proper execution of brand marketing programs. In India, advertising and promotions aren’t always articulated exactly as brand managers want them because the end retail channels are primarily street vendors (95%). Even multi-brand retail groceries such as Big Bazaar may not have the standardized displays or promotional material that brand managers desire.
SPAR uses mobile technology in a very innovative way to ensure retail presentation. Teams of field staff go to retail locations and take a photo of the shop for uploading to a database. The photo and a delimited text message of survey data are sent to a database where clients can see the retail store and know whether the store is in a highly trafficked area or is on a corner at the end of a T-intersection. This data is then tracked with sales so that clients can gain customer insight and see how well promotions work. Verma called this “orchestrating visibility.” SPAR Solutions products allow clients to measure the ROI of their promotions
Some interesting points:
- As large retailers (e.g. Wal-Mart and Tesco) enter India, they will be able to bleed losses until the small competitors are dislodged
- On othe other hand, there will always be a place for the small shop owner (especially in towns) because the shop owner knows his customers well (e.g. that family had a baby recently so I’ll try selling diapers to them next time) and even makes home deliveries. Furthermore, small shopowners are an important source of credit for town and rural people. Purchases for daily necessities are made on credit and then repaid.
- Advertising is best done when communicated in terms of cultural idioms. This is the difference between “hot media” and “cold media.” Hot media makes the consumer process the meaning of the ad inside her/his head by referencing something that they already know. Verma gave the example of an advertisement that references Indian folklore: a bird drops stones in a cup to raise the water level. Cold media presents new information and the meaning is more external to the consumer.
- Illiteracy is still an issue for many Indians, so certain goods cannot rely on text to get their message across.
- Although the sachet concept has been very successful in exposing consumers to new products and increasing their availability, sachets have lower margins because the transport cost is the same while the packaging cost has increased.
- Goods distributors face political risk because their customers are mostly individual shop owners who are also required to make the minimum wage. When government raises the minimum wage (especially during election season), purchasing contracts become irrelevant because the terms no longer meet the minimum wage standard.
- It is very difficult to measure the retail environment because it is highly diverse and filled with a multitude of small shops. This increases the cost of measurement and encourages gut-based decisionmaking.
Benda-kaal-uru -> Bengaluru -> Bangalore -> Bengaluru
All the IT and tech jobs in Bengaluru have spawned a large number of condo high rises for the middle class. I assume the warning on the wall is to keep people from "defacing" it, but I'm pretty sure that they want to avoid "defacation" too. Source: Stephen Huie
After SPAR Solutions, we flew out of Delhi to Bengaluru. My knowledgable friend Ken informed me that the origin of the name Bengaluru comes from an old story that a King lost his way during a hunting expedition and was served hard boiled beans by a poor woman. The king named the place Benda-kaal-uru – “Town of Boiled Beans.”
We arrived in Bengaluru in the evening and stayed at another Taj Hotel.
General Electric – Made me Wish I Studied Engineering….
We woke up the next day to visit General Electric at the famous John Welch Technology Center, which opened in 2000. We met with Mano Manoharam, General Manger of Global Research in Bangalore.
GE is a diversified technology innovator in energy infrastructure (e.g. solar, carbon sequestration, hydro), technology infrastructure (e.g. jet engines, health care), consumer and industrial goods (e.g. fridges, industrial machinery), financing (investment), and media (NBC Universal). Besides the John Welch Technology Center, we also passed a GE Healthcare Center. Some interesting points from the meeting:
- In the next year, GE is planning to increase the proportion of their Indian-based technologists from 1/5 to 1/4 of their research staff
- Manoharam said that GE does not focus on “fundamental research” but instead upon making products and innovations that last for the long term (e.g. light bulb, CAT Scanner).
- The philosophy of innovation for some products is different depending upon its usage. You can reboot Microsoft Windows, but you can’t (or you don’t want to have to) reboot a jet engine in mid-flight. You need to get it right the first time.
- Reverse Innovation can be thought of in two parts: the market (what is the need); and the technology (how do you fulfill that need)
- The Center is a zero emissions campus (they convert their sewage and emissions into solid waste and offset any other emissions with on-site tree planting).
- In contrast to the Jack Welch 20/70/10 HR differentiation on the commercial side, performance reviews for researchers are led with more context for the kind of work that is being done. I definitely got the sense that there is a different culture within GE’s research arm than its commercial arm.
- GE wants its technologists to become specialists and not necessarily jump from one thing to another. Innovation is built upon deep knowledge
- From a managerial perspective, there are always enough people to do the urgent things, but never enough people to do the important things.
- The size of the campus allows for large scale Corporate Social Responsiblity projects to be undertaken by GE staff.
We took a tour of the facilities, which were huge and amazing. There was a pond and an outdoor cafeteria where we had thali for lunch. There are also outdoor meeting spaces for researchers to congregate in (there were boxes for ethernet connections at these outdoor spaces, although I’m sure it’s also a wireless campus).
Unfortunately, no cameras were allowed in the facilities, so no pictures!
Infosys – A Global Company with an Indian Footprint or an Indian Company with a Global Footprint?
The Postmodern architechture of the Infosys campus stands in stark contrast to the tin roof housing that surrounds the campus. Source: Stephen Huie
GE had a great campus, but design-wise, it was almost nothing compared to the Infosys campus. We began our tour with a (solar powered) golf-cart ride through the campus, which is like a little town. There are dormitories (mostly for the male bachelors), a swimming pool, a gym, sports courts, and amazing architecture. It even had its own convention center! Riding through was a little like riding through Disneyland (there was a Space Mountain-like building) or Las Vegas (a glass pyramid building).
Infosys was founded in 1981 by seven friends. All of the people who worked at Infosys from the first IT employees to the janitors are now millionares (in US$) because they were all given stock options. Infosys began as an IT outsourcing company but has moved into higher value IT solutions, more applied IT research (i.e. building programs to work on top of other applications) as opposed to basic IT research (i.e. creating their own programs and platforms), and IT (and soon, business) consulting.
- As a general policy, Infosys carries zero debt! This forces them to grow organically and make sure they are strategic when acquiring new firms
- Infosys is trying to gain access to US federal government contracts via acquistions in the US. Indian government contracts are hard to come by because they take so long to be planned and authorized by the government. Infosys is holding back any aggressive pursuit of European government outsourcing contracts until the EU decides whether or not it will implement EU-wide guidelines on government contracting.
- Infosys values learnability over all else. Since technology is constantly changing, their employees must be willing and able to learn new skills
- Infosys has an enormous training program for their employees. Employees must become certified in certain specialities and at different levels. Their Mysore campus is the largest corporate training center in the world.
- Infosys is building campuses in China, where the cost of IT labor is still low compared to India.
- Like GE India, the scale of the Infosys campus allows for campus wide CSR initiatives
- Infosys donates 1% of its After Tax Profits to charity each year.
We sat in Infosys' Jamseti Nusserwaji Tata Conference Room, which is the same conference room in which an Infosys founder inspired Thomas Friedman with the idea that "The World is Flat." Source: Stephen Huie
Infosys has technical offices in the Americas, Europe, and Asia and their clients are from all over the world. One might say that clearly, this is a global company. In fact, it was an Infosys founder that inspired Thomas Friedman to write The World is Flat. However, our Infosys host still said that they have a long way to go before they can truly be a global company. Currently, 90% of Infosys technical staff are Indian, which is a far cry from having a truly global reach.
January 15th, 2011 by Stephen Huie under Incredible India. No Comments.
After our whirlwind through three companies in Delhi, we left on a 5-6 hour bus ride to Agra in Uttar Pradesh. We stayed at the ITC Mughal Hotel. We woke up the next day for a day of sightseeing.
The Taj Mahal
Me and the Taj. Source: Stephen Huie
The Taj Mahalwas built by the 5th Mughal emperor Shah Jahan to hold the remains of Mumtaz Mahal, his 2nd wife who he loved the most out of all his wives. The architect was Persian and the entire site is designed on symmetry and safety. Besides the symmetry of the main building, a 2nd mosque was built on the site to mirror one on the opposite side. Also, the Arabic script on the Taj is built smaller at the base and larger at the top so that it looks to be the same size when you are looking up at it. The four minarets at the corners of the Taj are tilted outwards so that in case of erosion or an earthquake, the towers would fall outward rather than inward upon the Taj itself.
The Taj was inlayed with precious and semi-precious stones. Although subsequent invaders looted the precious stones and gold ornaments, many of the flowers still display the shine of the two layers of inlay, which make the Taj sparkle. Source: Stephen Huie
The Taj is thought of as a romantic place symbolic of love. There used to be rumors that a second “Black (marble) Taj” was planned to be built across the Yamuna River from the white marble Taj Mahal. The Black Taj would have held the remains of Shah Jahan and the two Tajs would be connected by a bridge over the river. Later archaeological excavation would prove this theory incorrect and indicate that the site of the Black Taj was merely a garden. It’s a nice romantic story though.
The 2nd gate to Red Fort was quite intricate - it was really more of a palace than a fortress. Source: Stephen Huie
Red Fort – Somewhat Tragic
Agra’s Red Fort was remodeled over time by successive Mughal kings, beginning with the 2nd king Humayun through the 6th king Aurangzeb, Shah Jahan’s 3rd son by Mumtaz Mahal. Each king made a different addition based on his preferences. One section of Red Fort had an early form of air conditioning. The walls were made hollow and water was run through them from a rooftop water source. The water would cool the room during hot days.
Within Red Fort, this is the site of Jahangir's Chain of Justice. The 4th Mughal king Jahangir hung a 30 foot chain of pure gold from the side of Red Fort. If a common person suffered the corruption of an official, he or she could ring the the golden chain to directly appeal to the king. If you look closely through the fence, you can see the Taj Mahal in the background. Source: Stephen Huie
Shah Jahan was deposed by his own ambitious son Aurangzeb, who killed his two elder brothers and took the throne. Aurangzeb imprisoned Shah Jahan in Red Fort where Shah Jahan lived out the remainder of his days looking at the Taj from a far distance. Aurangzeb’s ascendance marked the decline of the Mughal empire.
Return to Delhi
We returned to Delhi and had dinner at a restaurant on Pandara Road. That evening, I had bhindi (okra) among many other dishes and finished it all off with kulfi falooda.
After another presentation the next day, we would leave for Bengaluru.
January 14th, 2011 by Stephen Huie under Incredible India. 2 Comments.
In contrast, to CSC India's large new campus, many Indian-originated firms like CyberMedia focus their capital on the business itself rather than on physical office infrastructure. Source: Stephen Huie
Today we met with the President & Chief Editor and the Chairman & Managing Director of CyberMedia, one of the premier business technology publishers in India.
The power went out during the presentation, but in good Indian fashion, the presenter was not fazed and smoothly continued talking.
Most interesting points:
- CyberMedia acquired a US firm to run its typesetting, illustrations, and produce some content
- A “product might be global but the environment is local” – President and Chief Editor Prasanto Roy Kumar. Even though many technology reviews are produced in the US, those same reviews do not necessarily translate to India because the working conditions (climate, power, frequency) are unique to India. Kumar attributes the failure of CyberMedia’s early competitors to the fact that they just tried to copy and paste content rather than produce their own research in house.
- The sachet concept (small one-time use packages) successfully used by Unilever has been adapted to mobile data. People can buy small packets for one day data usage for their cell phones.
- The Bharti Airtel cellphone company (not related to CyberMedia) is successful because it focuses on marketing and outsources both its IT and communications networks
Chairman and Managing Director Pradeep Gupta talked to us about entrepreneurship and venture capital in India. He is a leader in Angel financing and networking in India. Two interesting points from his talk:
- In India, failure has a lot more stigma for the entrepreneur than in the US. For example, your marriage prospects as a man go straight down.
- The “demographic dividend” (large number of young people) that India is currently benefiting from may become a “demographic disaster” if India’s young people aren’t well enough educated.
Ranbaxy is one of India’s premier pharmaceutical companies. We met with Chief Information Officer David Briskman, who talked to us about Ranbaxy’s IT infrastructure and its growth path. Some of the interesting points by the speaker:
- Ranbaxy (like many Indian firms) has grown tremendously through acquistion rather than organic growth. Ranbaxy has acquired 24 different companies outside and inside India.
- Depending upon the country, Ranbaxy’s products are known as premium branded drugs or generic drugs. For example, Ranbaxy’s Romanian product is an extremely well known brand in that country whereas, Ranbaxy produces generics for the US market.
- “Collaborative autocracy” is necessary to get things done. In other words, build debate and work together but then move as one once a decision is made.
- Ranbaxy places their manufacturing facilities in tax havens even if it means increasing the costs of logistics and transportation (the tax savings is that much higher than supply chain savings)
We also visited the biggest employer and government department in the entire world, Indian Railways. Indian Railways is vertically integrated and produces its own passenger coaches and locomotives (freight cars are mostly produced by the private sector). The system is the linchpin of the Indian economy. Some interesting points:
- Freight traffic subsidizes passanger traffic, the latter of which has been operating at a loss for the past few years. Freight revenues have grown as the economy has grown.
- The rail system is set up to provide “door to door” delivery for many companies such as coal, iron, and cement manufacturers
- The rail system carries 75% of India’s coal, 81% of its fertilizer, and 46% of its cement.
- Indian Railways are building dedicated freight corridors from Mumbai to Delhi and from Kolkota to Delhi. This will allow freight and passenger lines to run more quickly. The eventual goal is to create a diamond between Mumbai, Delhi, Kolkota, and Chennai
- Indian Railways is considering creating a high speed passenger corridor between certain portions of the country, but the cost is extremely prohibitive.
- Indian Railways produces profits, a dividend of which is passed on to the government for other uses.
January 13th, 2011 by Stephen Huie under Incredible India, Information Technology. 1 Comment.
The CSC India campus was HUGE! Source: Stephen Huie
We met with high level executives from CSC India today. CSC locates its outsourcing component almost exclusively in India to provide Business Process Outsourcing, IT management, and higher end IT solutions. We were also given a tour of CSC’s facilities at their Noida campus. Some of the more interesting points:
- The President and Managing Director of CSC India is a US citizen working in Delhi whose boss is an Indian citizen working in Chicago
- CSC segregates some sections of their workforce from each other so that there is a far lower chance of sensitive client secrets being spread to competitors
- Security was pretty tight (photo registration of guests, security cameras, ID checkpoints, security guards) from the entrance through the more sensitive areas of the company.
- From a HR perspective, CSC has to closely manage how integrated their employees are with CSC culture vis-a-vis client culture. Clients desire different degrees of loyalty and culture toward their own company. This poses a challenge for motivating employee engagement within CSC.
- There has been growth in the demand for “Captive” outsourced workers who are employees of the outsource provicder, but who are physically located at the offices of the outsourcing client. This degree of separation from the outsource provider creates HR challenges
- The average age of CSC employees outside of India is about 40 years old and the average of of Indian employees is 28. This creates an opportunity for Indians to succeed the older non-Indian workforce
- Outsourcing for the public sector in Emerging Markets is the biggest opportunity for the BPO industry.
We also visited Akshardham, a Hindu temple dedicated to Swaminarayan that opened as recently as 2005. The complex was enormous and built with the kind of amazing craftsmanship and detail and stone materials that I would have expected from a centuries old temple. Surely, centuries from now, people will marvel at it more. Unfortunately, photos were not allowed inside the complex.
The two harmonium players in the middle were amazing singers. Also note that the man in the upper left corner of the photo is playing the banjo. He also played an acoustic guitar and electrical guitar. Source: Stephen Huie
In the evening, we went to a performance to celebrate Lohri, the Punjabi harvest festival. We listened to Punjabi folk music and Sufi music and, of course, we danced!
January 12th, 2011 by Stephen Huie under Incredible India. 1 Comment.
The class trip has been a whirlwind so far – we’re traveling and/or sitting all the time. So many sights to see and so much to learn:
One of the Himalayan units of the Indian Army rehearse their parade formation in preparation for Jan. 26's Republic Day. Source: Stephen Huie
Our first visit was to pay respects to Mohandas Gandhi at Raj Ghat, which is the site of his cremation. We drove by Rashtrapati Bhavan (the President’s House), Delhi’s Red Fort, and Delhi’s Baha’i House of Worship. We stopped to walk around India Gate, which was originally built to honor Indian soldiers who fought for the British. While at India Gate, we got to watch the dress rehearsals for Republic Day, the anniversary of India’s Constitution.
Humayun's Tomb became the architechtural basis for the Taj Mahal in Agra. Source: Stephen Huie
We also visited Humayun’s Tomb. Humayun was the 2nd Mughal Emperor (early and mid 1500s). He lost the lands his father Babur had conquered and went into exile in Persia. However, Humayun won Persian support and not only recaptured Afghanistan, Pakistan, and Northern India, but also expanded his territory. After his death (he uncharacteristically tripped on his own robes while walking down the stairs), his wife – who was Persian – constructed a large mausoleum for him. Before he died, Humayun also declared that he wanted a tomb to be built for his barber (i.e. hair cutter and stylist), who was his close confidant. The barber’s tomb (not to be confused with his father Babur) is just across the courtyard from Humayun’s. The lesson here is, you don’t have to become an important person to be memorialized; just be important to an important person.
Qutab Minar is Gigantic and Beautiful. Source: Stephen Huie
Later in the day, we visited Qutab Minar, which is more than 20 meters taller than Italy’s Tower of Pisa. Qutab Minar was built on the site of a Hindu Temple destroyed by the Mamluks (Turkish mercenaries) who later created their own dynasty in India. A few hundered feet away are the remains of an uncompleted tower that was begun by the sucessors of the Mamluks…..those conquerers did not last very long…
Priya Cinema Complex was a high end mall with many brand stores. Source: Stephen Huie
Sweet Thick Creamy Harmony……You Know what I’m talking About…
We stopped at the Priya Cinema Complex Mall for lunch. This is a high end mall with Adidas and McDonalds stores. For lunch we ate at a tourist oriented restaurant. The food was good quality, but very expensive. It seemed oriented toward people from the US because the portions were US-sized and the TVs were showing baseball, basketball, and WWF. The portions were so big we ended up ordering too much.
We had: Pindi Chole; Palak Malai Kofta; Paneer Makhani; Murgh Makhani; Dal Makhani; Seekh Kebab; Roomali Roti; and Naan. I also had Lassi Malai Maar Ke for the the first time. I’ve had Lassi and Rasmalai (see Malai) in the past, and I love them both. I was so surprised to see two of my favorite things mixed together in sweet thick creamy harmony. For the first time, I also tried a little bit of Jaljeera, which was very light and refreshing.
An old Indian Business Family…Evolved
We returned to the hotel late for our meeting with DSCL, a diversified agribusiness and plastics manufacturer and retailer. DSCL used to be part of a larger group founded by Sir Shriram, who started one of the largest business families in India. Shriram was in the same class as the Tatas and the Birlas. Like many such business families, the Shriram enterprises were highly diversified – to the point of lacking synergy. The holdings were split off to each of Sir Shriram’s three sons.
The most insightful points from the meeting:
- Traditional Indian businesses place a lot of value on Human Capital Management (e.g. DSCL uses behavioral psychologists to guide the leadership of its top executives; a lot of emphasis is placed on training staff; there is not much compensation differentiation between high and low performers)
- IT should be used to radically change a system rather than merely mechanize the current system. These radical implementations of IT allow for leapfrogging
- Listen to consultants, but then implement the changes yourself
Khan Market is the "poshist" market in Delhi. It is full of boutique jewelery, clothing, and food stores. There are also high end boutique restaurants (e.g. "asian fusion"), Western-style restaurants (e.g. "American Hot Dog Factory" and "Chicago Pizza") and speciality stores (Full Circle Books has an amazing selection of political, economic, and lit crit books). Source: Stephen Huie
Khan Market – Kebabs and Paan
I said I’d mention the kebabs at Khan Market from the day before. I went back the next day and had great mutton seekh and fish kebabs wrapped in chapati.
Paan is a palate and breath freshener that may use a variety of spices and sweets. Source: Stephen Huie
I also bumped into our class TA Jibben, who introduced me to Paan (sans the betel nut, which I also tried separately), a chewing mixture wrapped in leaves. It was really refreshing.