Spencer Stuart Perspectives | Leading the Indian consumer market

Spencer Stuart Perspectives | Leading the Indian consumer market
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First Published: Mon, May 26 2008. 12 00 AM IST

The Indian consumer story is one that has caught the attention of the rest of the world.
Rising incomes in the hands of a young population, a growing economy, expansion in the availability of products and services and easy availability of credit—all this has given rise to new consumer segments and spend levels.
While consumerism has seen a gradual build-up, what is certain today is that there has been a genuine uptake in consumption. Whether it is mobile phones, credit cards, apparel or organized retail, people clearly seem to be spending more, particularly on discretionary items. And, the consumer seems to be everywhere—be it the large metros, the emerging new cities, the small towns or even in rural India. What is more, these new segments are also quite diverse—be it the technology-savvy children, the independent youth, the empowered urban woman or the first-time rural customer.
While this bodes well for firms in terms of demand, it has also raised new challenges. The most critical is the question of leadership development. Some of the pertinent questions that a leader in this space has to face— “what kind of talent will companies need now that they are selling to a new, emerging consumer who is not well understood? More importantly, what kind of leadership will be required to manage growth effectively?”
These questions gain special importance given that companies are increasingly being led by individuals very unlike the majority of their consumers. Urban professionals are hypothesizing about rural India and making decisions that affect the lives of the middle classes in the small towns. Is this business as usual, or should companies be concerned?
With the Indian consumer maturing fast, and upgrading within product segments at an exponential pace, consumer companies are finding it a challenge to keep up with their expectations and needs. This has led to a realization that companies now need to straddle the whole consumer pyramid rather than being focused on one part of it if they want to succeed—a strategy that has worked within the Future group, with its Pantaloon and Big Bazaar brands.
Challenge of diversity
With expanding global footprints, Indian companies also need to deal with a culturally diverse employee base and an international customer segment. In such an environment, dealing with diversity is a major challenge for today’s leaders. And this includes diversity of ideas, diversity of businesses and diversity of talent—all of which require flexibility and the ability to shift and turn with every opportunity.
Add to this the need for an entrepreneurial mindset, which is what companies such as Nokia Oyj believe in. Tomorrow’s leaders need to be able to pick up the contagious ideas, the next big opportunity.
Furthermore, due to the unique dynamics of the Indian market, they need to be very quick in identifying the threads that are going to work in India.
There is also wide acceptance that innovation is not just product innovation any more. It is about understanding how to innovate a business model, or an operational process, or even management behaviour, and it will be up to the current crop of leaders to identify and drive strategy to make this happen.
The big picture
Illustration by Malay Karmakar / Mint
While dealing with the talent shortage in times of growth, one can lose sight of the big picture, resulting in a dilution of the need for excellence. Ironically, in high-growth markets, it is easy to think that everything one is doing is right and the danger lies in believing that one has it all figured out. With the overall economic expansion of the past few years, there is a sense of a rising tide having lifted all boats. It is in the coming future that the true mettle of leadership will be tested.
At the same time, in India, there continues to be a gap between the demand for, and?availability?of,?leadership talent which is seasoned, globally exposed, and locally experienced. This becomes apparent when compared with mature markets where, on the one hand, firms such as General Electric Co. and Proctor and Gamble Co. have built in issues of talent identification and succession planning into their strategy for several years. On the other hand, only a few firms in India have focused on developing a leadership bench in the past. Going forward, this will need to become a critical area of investment to ensure the presence of high-quality boards and CEO talent.
One major concern regarding leadership development is that the internal processes and organizational structures meant to further growth are actually doing the reverse. Multiple reporting lines have reduced the time available to senior management to observe and reflect on the larger picture. Additionally, the effectiveness of traditional models of mentorship have been challenged as senior management are stretched on their time. Much of leadership development within organizations has also been through the use of competency models and “hiring fit for now” has companies mapping people to a profile—leaving little scope for internal recruitment and movement of people between functions and geographies to develop the well-rounded leaders of tomorrow.
It is critical that corporations understand their own needs for leadership development and customize, in a proactive fashion, a solution based on them. They need to individually identify the interferences—the internal and external blockages—to leadership effectiveness and focus on strategy five years down the line. Whether this is achieved by coaching, mentoring, on-the-job-training or time out for reflection, the emphasis on the “now” has to expand to the needs of tomorrow.
Talent models
With the fast-paced rate of change, it is going to be a challenge to train individuals to develop the mindset to understand the new Indian market. While there is a chain of thought that says true talent is not constricted by background, a number of companies are re-evaluating their talent models, realizing the big implications of making the wrong decision in leadership development. There is a focus towards identifying new consumer segments—just as Reliance Communications Ltd and Bharti Airtel Ltd turned their focus on the rural consumer, while brands such as Van Heusen and Wills Lifestyle took the leap to introduce clothing for the urban woman.
As this trend expands, companies will also need to shift the talent intake funnel and leadership development processes to be oriented towards such new segments—whether it is a focus towards addressing diversity in management ranks through the induction of women, people trained in rural management or tie-ups with management institutes to?create?special?programmes aimed at generating the skilled employees required for expansion.
Tomorrow’s leaders, thus, not only need to understand leadership concepts, but also need the ability to understand current trends, while identifying future opportunities in new consumer segments. Equally important is awareness of global business drivers since they need to manage businesses across boundaries in foreign markets, with a diverse employee base.
At the same time, internal processes and structures of companies should encourage an entrepreneurial spirit, giving individuals the time and space to think beyond their immediate action areas.
Acknowledging this is half the battle won. And there is a general level of optimism that a new crop of leaders will emerge in the next few years that will have experienced the dynamics of the new consumer and will, therefore, be well positioned to lead companies through these uncharted waters.
Send your comments to spencerstuart@livemint.com
Anjali Bansal is a consultant in Spencer Stuart’s Mumbai office, and leads the India practice for the firm.-
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First Published: Mon, May 26 2008. 12 00 AM IST