Consumer the cornerstone of strategy, says Corporate India
Indian corporates are increasing focus on listening to customers and engaging with them, and reworking business strategies to fulfil their requirements
Mumbai: Indian companies are increasingly realizing the need to form and execute their business strategies by keeping their ears to the ground and listening to a demanding consumer, in an economic environment dominated by transient consumption patterns.
Speaking at the first edition of Mint’s Corporate Strategy Awards 2018 in Mumbai on Friday, Gaurav Zutshi, chief digital officer at Aditya Birla Capital Ltd, said: “For us, the most important thing is customer centricity. We don’t have a physical product (in the financial services business), and everything we do is focused on selling an experience centered around the customer.”
The importance of personalizing each consumer’s experience in an increasingly complex environment marked by an evolving regulatory landscape, and the advent of digital technologies, cannot be overstated.
“You must offer the right product at the right time, to the right customer. We have been customer-centric in all our offerings across sectors by pushing for the use of analytics, technology and operations excellence. This has been our strategy for the last decade and has not changed. Focusing on the right segment allows you to penetrate deeper,” said Ashish Panchal, executive vice-president, group business head and chief of staff at Bajaj Finance Ltd.
Bajaj Finance took the pole position in the “Shaping” category of the awards, characterized by a nascent, unpredictable and malleable business environment where the leader influences and establishes the rules of the game. Even so, merely understanding consumer patterns and needs may not be enough.
“I often hear the words—customer, consumer, buyer, owner—we must realize these are transactional terminologies and using them is fundamentally myopic. At Royal Enfield, we strive to understand people and their motivations because doing so prevents us from encapsulating them in categories and industries. We would like to figure out how we can fit into the lives of the people we serve,” said Rudratej Singh, president of the motorcycle division at Eicher Motors Ltd.
The maker of the Bullet motorcycle won the award in the “Classical” category, marked by a relatively stable and predictable market, where a competitive advantage is won by building superior scale and capabilities. Simply looking through the retail lens helps as well, like in the case of infrastructure giant Tata Steel Ltd.
“Over 12 years ago, we began to look at the retail side of steel and organized its marketing on the same lines as an FMCG (fast-moving consumer goods) company would. This capability was built over a long period of time and has paid off, because revenues from the retail steel business are insulated from other upstream activities. Our strategy ensured revenue stability over the years and paid off over the downturn,” said Anup Sahay, chief of corporate strategy and planning, Tata Steel.
The Tata Group flagship won the first place in the “Renewal” category, which is marked by a harsh business environment as indicated by weak financial performance, in terms of low growth and paucity of capital.
To be sure, even the most adaptive and innovative of strategies can amount to naught, if not backed by strong execution.
“We believe in strategy in action, not strategy in isolation. In an information democratization era, strategy per se is a competitive advantage, but only when backed by very strong execution,” said Panchal of Bajaj Finance.
“We need to back up even more ambitious strategies with last-mile execution for India, which is a huge market on the cusp of a rapid transformation, because as the per capita income crosses $2,000, the inflection point across categories is about to get unleashed,” Panchal added.
Apart from consumer centricity and strong execution, flexibility and harnessing the power of social media make for a prudent strategy mix.
“The only constant in our (entertainment and advertising) industry is change; so our strategies are adaptive because we need to make a quick course correction as the market environment changes,” said N.P. Singh, chief executive officer, Sony Pictures Networks India Ltd.
“The evolving economic and regulatory environments, in addition to market dynamics, have impacted us significantly as well. For example, demonetization and implementation of the goods and service tax (GST) impacted advertising revenues strongly. These changes required us to sharpen our focus on managing our costs efficiently and looking at new ways to monetize our content, Singh said.
Sony Pictures ranked among the top three companies in the “Adaptive” category.
Now a pervasive force to reckon with, social media is one of the most superlative ways of connecting with consumers.
“Given the quantum of change that we have seen in the past five years, one strategy that works is social messaging. Brands that look to connect with their consumers over a greater purpose—such as women empowerment or equality—are seeing a lot more resonance. However, brands must be consistent to come across as authentic and real,” said Sunil Mehta, senior vice-president and area systems director, central Asia, J. Walter Thompson.
The Mint Corporate Strategy Awards 2018, conceived in consultation with the Boston Consulting Group (BCG) over the past year, have considered an elaborate methodology to identify the most qualified companies in the four categories named above on the basis of BCG’s Strategy Palette, which was built on several years of research on companies and successful strategies across the world.
The Strategy Palette was developed to help companies understand and navigate the strategic environment they compete in, with a “strategic environment” being defined by the levels of unpredictability, malleability and harshness of their respective industries.
Based on this platform, the companies evaluated for the Mint Corporate Strategy Awards were grouped into one of four strategic environments depending and evaluated on metrics such as three-year data on sales, profitability, return on capital, and debt-to-equity ratio.
The companies’ performance was quantified relative to industry averages and then combined with “soft-score” components for corporate social responsibility (CSR), women’s initiatives, and the overall work environment to rank companies within each strategic environment.
Mint then constituted a jury of industry leaders and experts to examine the list of finalists, discuss recent developments for each of them, and select the winners.
In each category, the winners reflect the strength of their performance and strategic position relative to their competitors in a similar strategic environment.
Nida Paloba, AGM (corporate communications) at Tata Sky, said: “We listen to everything the consumer has to say because there may be a latent need that we need to address in the form of a new service. We also need to keep the consumer within the Tata Sky net for perpetuity; so it’s our responsibility to understand what they will end up liking, and provide that.”
Tata Sky ranked first in the “Adaptive” award category, characterized by an uncertain demand and pricing business environment, which requires continual experimentation and adjustment.
“Having said that, we would like our consumers to be even more demanding, because that would help us serve them better,” Paloba added.