Posted on 27-11-2011
Filed Under (PARADOX) by Shombit

People rise in life by moving up the institutional ladder. Or a handful dares to scale a steep mountain with a mere rope. Of this planet’s 7 billion people, perhaps just 1% takes this life-risk of dangerously ascending a rope.

The institutional ladder starts from below the poverty line. In step you climb a certain hierarchy with education, years of experience, the right contacts. But only specific expertise, self confidence and persuasive ability can place you atop the pyramid.  Exceptional people like Bill Gates can break the mould or skip steps. My ambitious corporate friends in different companies I’ve worked with in the West and India, have asked me how to break conformity in their lives, leapfrog professional conundrum to land on their dream profession. Beyond my professional assignment with these companies, I always execute an unarticulated responsibility of creating passion among my large circle of manager friends. Actually I’m writing this article on their request. People daydream of entrepreneurship, but hesitate to leave comfortable jobs. Job security kills the human spirit of challenge.

Self confidence is the only asset you need to advance. Let me narrate a real life experience. A client friend in Paris, after some important meeting, would suddenly not be seen for 2-3 months. I became despondent when I came to know he was undergoing therapy for stomach cancer. This top-class Managing Director, immensely knowledgeable, an expert in full control in a global corporate environment, is a beautiful human being who maintains relationships with graciousness. He’d always address me “Crazy Creative.” At our next project development meeting, I wanted to wish him speedy recovery without mentioning his problem. I went to Brentanos, a Parisian literary fixture since 1895 which unfortunately closed doors 2009, and picked up books on sociological and romantic aspects of living. After quite awhile he called me to reveal that the books I chose became his best mental curative medicine. That overwhelmed me. I knew he’s an avid reader but without knowing his taste I’d selected for him in my creative way. The best part is 20 years on now, he’s in perfect health, mind, family and profession. He’s had the courage to quit the job, start an enterprise which he’s running successfully. His remarkable self confidence continues unabated.

Being entrepreneurial is a state of mind, not about self employment. When you intrinsically have strong control over yourself, you’ll drive it, whether you work as an employee or start your own business. Your entrepreneurial grit can make your boss your subordinate. Years of experience doesn’t count in today’s fast-moving digital world, only specialized expertise matters. Don’t take your high post, big room, bigger staff, comforting corporate facilities as your achievement. When your intelligence, self confidence, curiosity and innovative, productive ability are under your grip, you have everything to rise, succeed and fatten your wallet. That’s your shelter in the institutional ladder’s open sky; you know you can go anywhere.

Mountaineering up a rope is difficult, uncertain, creative escalation emanating from a huge self urge.  Unconventional creative people are society’s deviants tugging at this alpinist’s rope. They choose to escape the institutional ladder inspite of societal pressure to conform. They perforce develop a bulldozer mentality to climb creatively while continuously producing emotion in high ground as writers, musicians, painters, philosophers or actors.

The creative person’s mountaineering mindset is at odds with institutional climbers. Frustration can diminish their creativity. If during creative execution you think your output will make you wealthy, you will suffer. Never take the success period of a creative alpinist as your benchmark. Nobody knows the struggle the person underwent in formative years. Pursuing the creative rope track from early years, your first priority is your artistic pursuit, not money, car, family, home, or holidays. Avoiding the comfort of possessions and family support, your devotion to master your creative talent will automatically bring you wealth when you’re true to your creative power.  Art legend Pablo Picasso was a Communist who knew that only rich non-Communists can buy his paintings. One of his marriages was with Olga Khokhlova, a ballerina who introduced him to Parisian high society life where his art sales boomed. Later he left her. Van Gogh’s alpinism was the opposite. A true genius, he sold only one painting for just 400 francs a few days before he committed suicide from frustration at age 37.

Several 20-25-year-olds today watch famous entertainers on TV and Internet, fall in love with them and want to take the creative route. They never analyze the entertainer’s trajectory, how struggling odds and competition he reached the top. Indian parents can be unrealistic too. They try achieving what they missed out in life by pressurizing children with extra-curricular activities, the affluent even buying a piano. But when the child gets motivated to become a musician, the parents shatter his morale by reversing gear to make him a doctor or engineer.

For me, both the institutional or alpinist climb culminates in self confidence. No parent or godman can transmit this totally self-driven attitude. Domain expertise is the main source of confidence; arrogance and complacency comprise defense of a deficiency. Boxing World Champion Cassius Clay (Mohammad Ali)’s early practice demanded a 5km run but he’d run 15kms. When his coach reprimanded him he announced the extra 10kms was for becoming the greatest boxer on earth. He was just a teenager then; his self confidence allowed no interfere on his personal challenge.

Creative people come from both poor and rich families. The clear difference could be that author Charles Dickens started with an empty stomach without shelter, whereas Victor Hugo’s childhood was reasonably comfortable. But both had to climb the mountaineering rope to be recognized as being authentically creative. Society’s system can always disturb you to lose your confidence, you need powerful inner gumption to fight to build it. When success is yours, people will drum it out for you, but lack of confidence can make you a fossil, irrespective of the genius that’s inside you.

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Posted on 20-11-2011
Filed Under (POLITICS) by Shombit

From Discomfort Zone column by Shombit Sengupta in Financial Express and Indian Express

Bengali intellectuals are still happy to remember Gopal Krishna Gokhale, pioneer of Indian National Movement, saying, “What Bengal thinks today, India thinks tomorrow.” Upper society Kolkatans calling themselves buddhijibi (perhaps “Intel Kolkata” is a better description) relish this, and measure people’s intellectual caliber by checking their deep admiration for the genius of Rabindranath Tagore and Satyajit Ray. Both undoubtedly had genius quality, but the problem is that in any creative and philosophical angle everyone is always compared with them. Although 70-80% Bengalis doesn’t understand Tagore and Ray, the Intel Kolkata elite that represent Bengal, irrespective of political affiliations, are driven by this school. But being a Bengali, its difficult stomach such arrogance. I feel hurt when I visit Bengal’s villages beyond Kolkata for my work and see uncertainty of life among my fellow Bengalis. I always think that I could have been in the same position today because that’s where I come from.

What was Bengal before the British took it over in 1757? The Mughals had no interest in this fertile farming land of Adivasis. If Bengal were so advanced, how were the British able to plunder Bengal (detailed in my article ) to start England’s Industrial Revolution? It’s possible an affluent few collaborated with them, becoming Anglophone in education, culture and snobbery. This was the departure of Bengali intellectuals. Happy to get this small number of Bengali British, the British Raj nevertheless found Delhi more important politically so shifted their capital from Kolkata to Delhi while the Bengali British looked on.

Where were Bengali intellectuals when the British gifted India with Independence 1947? In 1905 when Bengal was divided, it sparked off such opposition that the British government was compelled to undo the decision. Yet in 1947, Bengal succumbed, and its idea of nation underwent a change from Tagore’s Swadesh to Swadhinata. Bengal got divided; my family had to flee Dhaka at midnight, leaving behind everything to become street beggars in a remote West Bengal refugee colony where I was subsequently born. A Bengali leader joined the Axis Army to save India from the British, but failed. After partition, Bengali politicians could not manage to get funds like Punjab did for refugee development. Bengal’s Anglo-influenced society later drove politics of every hue that the masses never understood, and vice versa.

Bhumi sanskar” (land gifted to the poor) seemed a noble idea, but was it devoid of political gain? Poor farmers have no entrepreneurial capability, so with 2-acre land plots they barely manage the revenue required for farming. They spend Rs 30,000 on input purchase for average revenues of Rs 50,000 per year. It’s possible to make Rs 120,000/annum from 2 acres, but without knowhow, they remain in poverty. Just imagine if industry had been encouraged here, how Bengal’s economy would have been transformed today! The poor could have earned at least Rs 10,000 per month working in industries and not come to overcrowd city slums.

Land has become an emotional game with political parties and the masses. Property as asset rises in valuation through industrial evolution that activates the economy. If asset doesn’t translate to goodwill what use is 2-acres of stagnant, non-usable, non-goodwill creating asset to uneducated Bengali farmers? Their children are running away from villages to earn more. For Intel Kolkata politicians, the land is emotional blackmail in lieu of teaching farmers how to take care of their future. They could have used Bengal’s incredible strategic geographical position with industrial flourish to become a fantastic gateway link in the Bay of Bengal. But instead of bringing in industrial development, the Government did nothing to retain the industries that were vacating Bengal.

A recent survey shows Bangalore is losing its IT dominance to Gurgaon and Noida due to huge traffic, frequent power outages, erratic water supply and poor sanitation. In the $1000+ billion global IT market, Indian exports amount to ~$60 billion. Bengal has the educated manpower to grab at least $50 billion of this spend over the next 5 years. Since I left for Europe 37 years ago, and travelled on work across India in the last decade, I can see how I had to radically and consciously change my personal attitude. In Bengali culture, sudden bursts of emotion in the family, among friends and the workplace go beyond limits, elders have to be obeyed irrespective of their being right or wrong. Being critical for the sheer joy of it is widespread, while working hard to maximize knowledge and expertise is at a discount. If somebody in the same domain does well, spontaneous appreciation may be difficult. Lack of daringness or entrepreneurial spirit is a concern, but following best practices may not happen as "I know better” is the preferred phrase. It’s time for Bengal to change, to turn itself into an Asian business and industrial hub which the state definitely has the potential to become. Of course Bengal has to wriggle out of mass politicization and avoid being over-emotional.

If Bengali political thinking were so much in advance, how did the state historically fall into big disasters? Political parties are gambling on satisfying both farmers and industrialists, but there’s status quo. What should the tradeoff be? Will industrialists seeking God’s help with a 9-day religious mahayagya mitigate the dilemma? Have you seen, anywhere in the world, industrial development happening through God’s intervention? This way of looking at industry is again over-emotional and not allowing Bengal to go forward. In the last 100 years Americans had proved that industry brings prosperity. Also, by outsourcing manufacturing and services, increasing dependence on “virtual financing” with lack of corporate governance, among other issues in the last 20 years resulted in the real estate bubble leading to a recessionary situation where some Americans have become street-beggars too. The only route to change, as per advice of their economists, is to get manufacturing industries back. Overcoming over-emotion and complacency, will Bengal also take this cue of setting up manufacturing industries to become a major South Asian industrial hub?

To download above article in PDF Over-emotion cannot prosper a state

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Posted on 13-11-2011
Filed Under (BUSINESS) by Shombit

From Discomfort Zone column by Shombit Sengupta in Financial Express and Indian Express

A corporate name with aspirational evocation is timeless. New generation global business leaders like Bill Gates, Steve Jobs, John Chambers, Philip Knight among others, have figured that out in the last 40 years. Instead of anointing their companies with their own names, they chose to ignite end-customer imagination and coined Microsoft, Apple, Cisco (from San Francisco) and Nike (Greek Goddess of Victory). There’s absolutely no problem if the founder with his family is the company’s owner, but the business does not need to carry the family name. Except for creative fashion or jewelry businesses that cannot avoid the creator’s authenticity, so designers like Louis Vuitton, Jean-Paul Gaultier endorse their brands.

For a recognized inventor, giving his company his name can work, eg. Henry Ford. The inventor becomes the world’s icon, his family name and brand become synonymous with an invention. Sometimes though, even such a corporate brand can carry risk. When Henry Ford’s picture was found in Adolf Hitler’s desk, a crisis erupted. It proved Ford was aligned to a Jew-killing regime. Actually Ford’s anti-Semitic outlook emerged earlier in 1920 when he wrote in his newspaper, Dearborn Independent, “If fans need to know the trouble with American baseball, they have it in 3 words – too much Jew.” His book “The International Jew, the World’s Foremost Problem” inspired young Nazis. On Hitler’s birthday Ford would gift him $50,000. In the US he managed his surname as his company’s brand because he commanded immense power with superior business acumen and invention. But wouldn’t his hobnobbing with Hitler negatively impact a customer or employee of Ford, especially a Jewish one?

On the other hand, Louis Renault couldn’t manage his aura inspite of inventing the automobile’s drum brake, hydraulic shock absorbers, compressed gas ignition. During German occupation of France in World War II, he supplied 34,232 vehicles to Hitler. Liberated France imprisoned him for betrayal. He died in Fresnes prison near Paris awaiting trial. His family was denied his company which French government nationalized. Renault’s management has since avoided mention of Louis Renault and ignored his grandchildren in Renault’s centenary celebrations 1999. Another Frenchman with Nazi association saved his family business, and Madame Liliane Bettencourt became the world’s second richest woman. Her father Eugene Schueller invented hair-dye formula Aureale in 1907. He’d actively supported violent Fascist organization La Cagoule, yet his company L’Oreal became successful for creating ground-breaking products that understood women’s desire for beauty. This innovative power overshadows his reputation, taking L’Oreal to global heights. What portrait would L’Oreal carry today if it was named Schueller?

Breakthrough 19th-century inventor Thomas Alva Edison didn’t manifest his name in his company, General Electric. His many inventions inherently find meaning in “GE Imagination at Work” where history and contemporariness fit the company’s authenticity like a glove. Another American, Sam Walton, founded Walton’s 5 & 10 in March 1951. Changing to Wal-Mart 1962 to start his retail chain, he corporatized it to Walmart in 2008. Global image takes a different dimension when a company does not bear a family name.

Japan’s Toyoda family were loom specialists, but entering the consumer-connect business of automobiles they changed to Toyota in 1939. Apart from Honda and Mitsui, most Japanese companies have gone global without using family names. In their urge to become international and universal, companies like Mitsubishi, Hitachi, Toshiba, Nissan, Sony, Canon, Shiseido have company names not related to the founder’s name.

Let’s compare performance and global image using family and non-family names in the footwear industry. Bill Bowerman and Philip Knight founded Blue Ribbon Sports in 1964. In 1978, they had the guts to change their running business to Nike, taking it global without using their own names. Family owned Bata, founded by Tomas Bata in Czechoslovakia 1894 retails in 50 countries, having sold 14+ billion shoes. Yet Bata couldn’t create the global culture that revolutionized the footwear business which Nike did. 

Handicaps of family named companies: The first is security for family members. Next, if any family member gets discredited for external reasons, it reflects in the business. Others who carry the same surname can use it inappropriately, making the original business vulnerable. There’s no telling if the founder’s heirs will continue the business as passionately. When digital technology is bringing fortnightly advancements, it’s difficult to change a company’s perception if it’s associated with a person in the past. The founder’s value system may not make it credible to contemporary times. For an employee at any level, it connotes working for the owner. Unnecessary problems can also be created by activists who see nothing beyond the founder’s wealth. Aspiration is another problem. “Knight Just do it” may be construed as Philip Knight’s diktat, but when Goddess Nike says, “Just do it” you are totally enamoured.

Without passing judgment on Indian founder family named companies, my perspective here is to imagine their future in the global field. In the Licence Raj era, Indian companies with family name heritage as the corporate brand in business have given end-customers the trust of being bonafide. Now that global competition is already here, end-customers have the choice to compare differences. Several Indian companies are already taking a beating in benchmarking with global biggies. Not yet being associated with fundamental invention, Indian companies are likely to continue to operate with available adopted technology.

India reflects more as a business and trading society rather than being inventive. This is the time to transform the family name to a more mystic brand before global companies overwhelm end-customers away. A well researched company name should evoke its product and service higher than its basic substance so that multiple market usage can never make it look tired or boring. It should never reflect the generic of a category. When combined with quality products and services, incredible communication and point of purchase experience, it should give differentiated perspective and benefit to end-users. The company’s future is more prospective when it has an added value name with universal appeal rather than a family name


To download above article in PDF How viable are family name corporations?

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Posted on 06-11-2011
Filed Under (BUSINESS) by Shombit

From Discomfort Zone column by Shombit Sengupta in Financial Express and Indian Express

Once upon a time a hundred years ago, the wealthy developed a craze to cross the Atlantic in the lap of luxury. Boarding RMS Titanic, the world’s first most luxurious, avant garde first-class ocean-liner sailing from Britain’s Southampton to New York, they were not going on a cruise, but just displaying affluence. Publicized as invincible against natural calamities and piloting mistakes, Titanic was tom-tommed as unsinkable. Yet the way crew members disused their every moment operating discipline (EMOD) took passengers to a watery grave. If vigilance with binoculars was delayed due to not finding them easily, it seemed like rat-like negligence in the ship’s elephantine preparations. Overconfidence was so high that for 2229 passengers just 20 lifeboats were provided, which saved 710 lives only when suddenly mid-Atlantic mid-April 1912, Titanic hit an iceberg. As per the ship’s size and much touted fantastic engineering, it was inconceivable that an iceberg hit could sink it. In sum, being high-tech, gigantic, accident-proof, pilot-mistake-proof and offering overwhelming experience all went for a toss for lack of 360-degree foresight, poor contingency planning and cocksure arrogance.

This is the Titanic fissure. It can happen in your business too at any time, irrespective of size. Unless you are alert, any size of hole in your enterprise ship can destabilize it. Growth mantra in business can have Titanic fissure symptoms resulting in inevitable disaster. Business requires a boundary fence, beyond which lurk these Titanic fissures. In emerging countries, jumping this fence for growth has become a religion. As demand is high, corporate culture fulfils it with vanilla supply. This syndrome of delivering on demand without caring about delivering real difference has seen company bottomlines plummet to 1-3% when global trend in the same industry is 8-10%. What’s the point of making a billion dollars in revenue but minuscule profit? Even a bank fixed deposit gives you 9.25%; when you go for high risk venture capital you can achieve upto 25% or even more.

Indian companies need to concentrate on the inner meaning of perceptible differentiation. If 2 soup makers differ their soup in colour, advertising story or packaging design, is there difference beyond the pictorial? If consumers perceive no functional benefit, tongue enjoyment and health benefit among the competing soups, they’re all similar. Real differentiation comes when extra benefit is provided to improve consumer life. In today’s proliferation of global brands in India, consumers understand this difference. So brands offering no perceptible differentiation cannot charge a premium. With all brands in a category aligned to the basic, the result can only be distressing profitability for the companies.

Let’s take the food category. The critical area to satisfy is uplifting what’s perceptible to consumers. Tongue enjoyment, functional health benefit and perceived differentiation are reasons for consumers to readily pay premium for branded food. Has the food industry debated upon or tried to understand the score or deeper meaning of the consumer’s organoleptics sensation? They merely seem to spotlight on supply chain issues, downscaling production or input cost, contracting temporary labor to shrink cost and creating entertaining Bollywood-style advertising.

Look at how young Indians are changing their food habit with American burgers, pizza and fried chicken. You may say global companies are attracting them with big ad spends. But look objectively at their business model, with less than 10 varieties they’re delivering a totally different taste to Indian food. It’s not the fast-food chain ambience people are returning to, they’re being offered a haunting taste that’s compelling.

With 63 million people, France’s food market is Euro136 billion. Branded food accounts for 30%, 50% is driven by the retail industry’s private labels while 20% comprises unbranded categories. The dominance of private labels reveals how brand companies conceitedly stopped differentiating product delivery since 1980s. They figured brand awareness and advertising will allow them to charge premium. But private labels challenged with equivalent quality and upto 30% lower price. So brands became vulnerable and private labels picked up market share.

The French love food, so do Indians. At least 200 million people in India can afford branded food, which can translate to a $200 billion market tomorrow compared to approximately $7 billion today. But lack of vision and execution capacity of India’s food industry has blocked profitable market growth. Companies need to invest to understand the consumer’s social environment and culture, from tongue enjoyment to health benefit. Only from research can a platform emerge for a food brand that consumers will devour. Marketing can sell the product but cannot design the consumer organoleptics-driven food product proposition. Nor can R&D professionals technically develop it. A lab analysis using the world’s finest chefs who have total knowledge about the consumer’s tongue can define the platform.

Food is a very sensitive category. Upto now, people in India are cooking food or enjoying it in restaurants, taking responsibility for their health. But a food company’s fundamental duty is to take total responsibility of the consumer, from taste to digestion to providing health benefit. A food manufacturer need not grow a diverse product portfolio or jump from one category to another with no core relationship among products. As India’s food market is vast, saturation will take place only after 15-20 years. So food companies have immense possibility to grow in a pre-determined boundary as per their knowhow competence.

I’ve personally experienced the Danone example where the company was growing with 14 highly diversified product categories post acquisitions, but profitability was about 2.5%. In 1993 Danone stopped this vulnerable growth and focused on one category, dairy. Apart from health benefit and digestion, Danone labored to score on taste even in 0% fat products. Such focus has made Danone global No 1 in the dairy category today with about 10% profitability.

A food company should design a limited number of categories that kowtow to the consumer’s tongue preference upto digestion and health benefit, and not get blinkered on the manufacturing backend. The more specialized the company is, the better its chances of making multi-billion dollar revenue and double digit profit.

To download above article in PDF $200 billion virgin market of branded food

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