Thursday, August 15, 2013

Akash Sahai Aimia India Interview

Akash Sahai, Managing Director, Aimia India

Yash Ved / 14:47 , Aug 01, 2013

Akash Sahai, Managing Director, Aimia India, has over 20 years of experience in loyalty and direct marketing industries. He began his career as a lawyer and then moved to leadership roles at United Airlines, The Loyalty Group, US Loyalty Corporation, Capital One Bank before moving to Fingerhut Direct Marketing as Executive Vice-President. Post that, Sahai led several entrepreneurial ventures both in North America and Asia in marketing and media industries. His resume boast of a law degree from the University of Toronto and an MBA from INSEAD. After having lived most of his life in Canada, Akash and his family decided to relocate back to India three years ago. 

Aimia India is the world’s leading loyalty management company. It offers a full suite of coalition loyalty, proprietary loyalty and loyalty analytics services. The Montreal-headquartered company operates in over 20 countries and employs 3,800 personnel. It owns and operates several leading coalition loyalty programs globally including Aeroplan in Canada, Nectar in UK and Italy, and Air Miles across West Asia. Aimia has delivered thousands of custom loyalty programs and analytics services, for close to 80 years, to hundreds of the world’s leading businesses across banking and financial services, retail, FMCG, travel, hospitality, telecom, e-commerce and other verticals.

In an exclusive interview to IIFL’s Yash Ved, Akash Sahai said Indian consumers are complicated, promiscuous and ready for the next generation of loyalty programs. 

Can you take us through your business strategy?
Though often described as a loyalty company, we are actually in the customer-relationship business. Aimia helps companies understand their customers better through data analytics. It then use insights from those analytics to build deeper, loyal and more profitable relationships with those customers. We aim to bring down our full-suite of loyalty services to the Indian market, help companies retain their best customers and increase sales with differentiated and profitable loyalty programs. Using our advanced analytics capabilities, we will enable companies to make sense of their data, develop insights, and then act on those insights using direct marketing to maximise customer value.

What are your expansion plans for the current fiscal?
We plan to launch several large loyalty programs for a number of leading Indian brands. We are also looking to build capabilities and a team to successfully deliver these programs. To that end, we have set up extensive partnerships with local technology, operations and system integration firms. We are also establishing a broad-based, multi-party coalition loyalty program in India, along the lines of our highly successful Nectar and Aeroplan programs abroad. We are currently tailoring it to the Indian market and partnering with some of India’s largest and brightest consumer companies.

Brief us on your partnership with Axis Bank?
We are thrilled that Axis Bank chose Aimia to launch its eDGE Loyalty Rewards program. eDGE is the first pan-bank loyalty program in India. It will enable Axis Bank to be more customer-centric in its approach by engaging customers across a wide range of products and services. The program was launched over two months ago and is already seeing substantial customer traction in enrollments and redemptions. 

What is your leadership team like?
Given that the loyalty industry in India is still young, there are not many experienced loyalty practitioners, but we were able to hire two of the best. Ajay Row, who leads our proprietary loyalty business, is one of India’s original loyalty and data driven marketing guru with over 25 years of experience in designing and running award winning direct marketing and loyalty programs.  Ajay helped build both Rediff’s and Wunderman’s direct marketing businesses in India. He managed the award winning Taj InnerCircle program for eight years before joining Aimia.  

Our COO and CFO, Vikas Choudhury, built a large analytics company after beginning his career as a consultant.  Both Row, who is an IIM graduate, and Choudhury, who is a Harvard alumini, are native Mumbaikars and well connected in the business community. We also have several senior members leading business development, account management and solution delivery. As a growing company, we are always looking for more leadership talent.

What are the services you offer?
We offer a full suite of loyalty services which covers proprietary loyalty services -- helping a company set up and run their own loyalty programs, loyalty analytics, and coalition or multi-partner loyalty. The services we offer cover the entire loyalty life cycle or value chain from doing a loyalty healthcheck, to consulting projects, managing a client’s loyalty program from design to execution, analytics, marketing and fulfillment. Our loyalty operations include providing loyalty engines and databases, establishing campaign management platforms, operating contact centers, and setting up rewards and fulfillment relationships.  Our loyalty analytics provides clients with advanced analytical capabilities down to the customer and SKU level. It helps maximise program return on investment through sophisticated targeting and predictive modeling.

Who are your clients?
In India, we work with some of the country’s leading brands such as Taj Hotels, Axis Bank, Tata Capital and Standard Chartered Bank. We assist all these clients with all or part of their customer loyalty and direct marketing needs.

Any investment plans?
India represents a major strategic bet for Aimia. Hence, we have made large investments in people, capabilities and time.  Aimia has brought several people from our global operations to help build our loyalty business here. It has also brought its state- of-the-art loyalty technology and analytics platforms to India. Realising that the India opportunity is a large and a long one, it has invested the patience needed to build a large and sustainable operation in India. 

How are your international operations doing?
Aimia is a global leader in the loyalty management space. It helps manage more than 200 million relationships across various programs. Over $76bin worth of commerce flowed through Aimia programs in 2012. We run some of the largest and most successful coalitions in Canada, US, Italy, Mexico, and West Asia. We have developed proprietary loyalty and analytics programs with more than 100 of the Fortune 1,000 list of companies which includes the likes of P&G, Coke, Microsoft, Exxon, etc.  A key area of growth for our business is emerging markets, as evidenced by our entry into West Asia, Mexico, Brazil, China and India. We are investing heavily in capabilities and continue to grow our global footprint. The future looks filled with opportunity.

Thursday, August 8, 2013

In today’s markets, we are all salespeople - Daniel Pink

Daniel Pink didn’t plan a career exploring the world of work as much as he gravitated toward it. After studying linguistics at Northwestern University and law at Yale, he became an aide to U.S. Secretary of Labor Robert Reich, and then served as chief speechwriter for Vice President Al Gore. “When I had the opportunity to dole out assignments, I kept the ones about work, labor, business, economics, and technology,” he recalls.
In 1997, disillusioned by the realities of politics and burned out by the workload, Pink quit to write under his own byline. An article published in Fast Company later that year became the kernel for his acclaimed first book, Free Agent Nation: The Future of Working for Yourself (Warner Books, 2002). It plumbed the transition from employee to self-employment by millions of people much like Pink himself, and established a format that Pink has been following ever since: presenting a highly articulate, accessible synthesis of a topic or trend and a practical tool kit for putting it to work at work.
Several more books followed, bringing Pink into the ranks of the world’s leading management thinkers and speakers. His most recent book, To Sell Is Human: The Surprising Truth about Moving Others (Riverhead Books, 2012), explores a topic ripe, perhaps even overripe, for Pinkian synthesis. The very nature of selling has been fundamentally altered by digitization, which continues to render long-accepted sales conventions irrelevant, yet, paradoxically, makes salespeople more important to companies and customers than ever before.
S+B: We used to hear that selling would cease to exist as a function—that salespeople would be disintermediated by the Internet. What really happened?
Those predictions underestimated how ingenious we would be at creating new products and services, all of which needed to be sold. Yes, we have fewer people selling music, but people are now selling artisanal foods and cloud computing.
The predictions also missed the rise of small entrepreneurship, which means more people are selling their own services. Someone like me isn’t categorized as a salesperson by the Bureau of Labor Statistics, but I spend a huge amount of my time trying to get other people to do things. Moreover, sales is no longer always a discrete function. The software companies Atlassian and Palantir, for example, have no formal sales forces. They say that nobody’s in sales because everyone is in sales. Then there’s non-sales selling. For instance, most of the jobs that have been created in the U.S. in the last 10 years have been in education and healthcare, which are all about selling behavior change.
In 2000, one in nine people in the U.S. workforce was in sales; today, one in nine people is still in sales. And none of the salespeople I interviewed in the course of doing the stories that led up to this book fit the old sales stereotype. They weren’t wearing plaid jackets and patting me on the back all the time, and I didn’t feel the need to cleanse the oil off myself afterward.
S+B: So how would you define selling today?
I don’t think there’s a catch-all term to describe selling, but for me, moving is the closest word. I’m trying to get you to go from here to there. I can persuade you that the Washington Nationals will win the National League this year, but I’m just changing your mind. Selling is an exchange. If we’re colleagues and I’m trying to get you to join my team, you’re exchanging your time and talent for the opportunity I’m giving you. It’s not denominated in dollars, but I still think that’s sales.
I recognize there are headwinds with sales because of the negative connotations. I’d like to bike into those headwinds and take back the idea of selling, not in a namby-pamby, defensive way, but in a slightly more sharp-elbowed, muscular way. I say in my book that I want people to see the act of selling in a new light. It’s more urgent, more important, and also more beautiful than we realize. It requires some fundamentally human skills, and it has become increasingly conceptual. As the VP of sales of the Italian candy company Perfetti Van Melle told me, “We’ve gone from selling Mentos to selling insights about the confections business.” You can’t get any more conceptual than that.
S+B: You propose changing the ABC sales mantra “Always be closing” to “Attunement, buoyancy, and clarity.”
These qualities encompass what you should do and how you should be if you want to move other people. For example, attunement is the ability to understand where someone else is coming from; it can also be called perspective taking.
There’s a difference between perspective taking and empathy that I might have conflated in my book A Whole New Mind [originally subtitled Moving from the Information Age to the Conceptual Age (Riverhead, 2005)]. I’ve since come to realize that empathy is related to understanding someone’s emotional state or feelings, whereas perspective taking is much more cognitive and analytical—it’s understanding someone’s interests. I think interests is the key word here.
The facts say that both perspective taking and empathy can enhance your understanding of someone else, but if you have to go with one, go with the analytical. I think the evidence says very clearly that people are able, especially in negotiation and sales situations, to reach a better deal for both sides when they’re focused on interests.
S+B: There’s a great quote in the book from the last Fuller Brush Man about sales being “an ocean of rejection.” How is buoyancy different from the power of positive thinking?
: A lot of the power of positive thinking was not built on any evidence. It was built on beliefs, some of which turned out to be right. But it wasn’t guidance from an empirical perspective. [University of North Carolina professor] Barbara Fredrickson has shown that positivity enhances well-being when it’s in the right balance. She has a three-to-one ratio: Your positive emotions should outnumber your negative emotions by three to one. But if the ratio is above 11 to one, you’re in la-la land.
Studies have also shown that purely positive self-talk—“You can do it,” the Bela Karolyi school—is better than nothing. But it’s less effective than interrogative self-talk. Asking, for example, “Can you do this?” The early proponents of positive thinking would find that abhorrent: You’re questioning your ability? But interrogative self-talk leads to preparation and planning.
Also important is changing the way you explain things. You can ascribe outcomes to internal or external causes. If you lose a sale, it’s probably not entirely your fault. But if you explain it that way, it’s going to be debilitating. If, after a rejection, you say, “Well, this always happens,” that’s just not true. [University of Pennsylvania professor] Martin Seligman’s research has shown that if you adopt an optimistic explanatory style and widen your ability to explain things with accuracy, you’ll be better off.
S+B: You define clarity as “the capacity to help others see their situations in fresh and more revealing ways and to identify problems that they didn’t realize they had.” What role does framing play in that?
Framing is curation, in a more conceptual sense. You’re looking all over the place and I’m saying, “What’s significant is what’s here.” I’m helping you separate the signal from the noise. If you frame choices in a digestible way, people are more likely to pick something.
If I’m selling you a great used car that has a minor nick, I’m going to be tempted to park the car in such a way that you won’t see the damage. But research by [Tel Aviv University professor] Danit Ein-Gar and [Stanford University professors] Baba Shiv and Zakary Tormala says that I should point it out, because the nick creates the context for everything else. It helps frame the valuation of the car. In some ways, you’re widening the frame when you do this. You’re saying, “Oh, there’s a nick there, but look at everything else. The totality of it is really good.”
Of course, this depends on how essential that nick is. There’s a big difference between a blemish and a scar. If it’s small thing, then widening the frame is actually helpful. If it’s a substantive defect, then you have to either explain that the defect doesn’t matter as much as customers think or lower the price.
S+B: In your final chapter, you propose extending Robert Greenleaf’s concept of servant leadership to sales. Why are service, purpose, and meaning such a pervasive theme throughout your books?
When you sit down and talk to people about their work, you realize that they’re spending at least half of their waking hours on the job. Their work is a window into who they are. And I think that as human beings, we aspire to do something meaningful. All of us ask ourselves, “OK, why does what I’m doing matter? What is my purpose?”
What’s exciting for companies is that appealing to a sense of purpose and meaning is very effective. [Wharton professor] Adam Grant has done some great research in this area. In a study of people in a call center raising money for a university, he found that employees who spent five minutes before their shift reading letters from people who were on the receiving end of the scholarship money they raised more than doubled their sales results.
S+B: To Sell Is Human is a pretty rare sales book. It doesn’t provide the reader with a sales process.
I did that consciously, because I don’t think there’s a one-size-fits-all process to selling Winnebagos, to asking somebody out on a date, to getting your kids to clean their room, or to pitching your idea to a book publisher.
I didn’t want to give people a set of custom Legos that builds only one particular castle, even if that’s an awesome way to build that particular castle. I’d rather give people a rich set of basic building blocks, which they can fashion into a process of their own and constantly evaluate. Sales processes tend to be very algorithmic. And when people get wedded to a process or to an algorithm, they miss all kinds of other clues and opportunities that could be really valuable.
Reprint No. 00204

Author Profile:

Is Strategy Fixed or Variable?


The short answer to the question above is yes. The challenge is how to make strategy both fixed and variable at the same time, which will increase the pace and quality of your company’s decision making and execution by leaps and bounds.

Successful strategists know that strategy must be adaptable, dynamic, and flexible. This is because every strategy is a bet on a perceived future and each day brings new learning and information about how your future might unfold. Technological innovations, political movements, regulatory changes, competitive disruptions, evolving customer expectations, organizational turnover, and count-less other forces conspire to render irrelevant, out-of-date and off-the-mark even the most “fact-based,” thought-out, and well-informed strategies. Moreover, every company and its businesses are confronted by a constant stream of challenges and opportunities requiring choices that could—and should—materially change where it plays or how it wins. Thus, the true work of strategy is never done; it happens throughout the year, every year and every day.

Nordstrom is one company that has institutionalized strategy as a continuous, variable thing. At each of its executive and board meetings, leaders address specific strategic challenges and opportunities that are material to the company’s enterprise value. They tackle issues and opportunities as wide ranging as whether to create a new young women’s fashion department, how to participate in the ecommerce revolution, and how to digitize its retail floor operations. As challenges and opportunities are resolved, they are replaced with new ones that are rolling relentlessly over the horizon (as they always do for every company). This has dramatically raised the metabolic rate of decision making and execution throughout Nordstrom. And it has made strategy a living, ever-changing, adaptable, and highly effective management tool for its leaders.

As a rule of thumb, companies can make two to three major strategic decisions per year, each of which can be worth 5 to 10 percent of an enterprise’s economic value. Thus, over any five-year period your strategy might turn over completely—though certainly not all at once.

So all strategies should be considered variable, right? Not so fast. While your strategy can—and should—continuously evolve, its foundation should not.

At the corporate level, it can take years to build your own distinctive way of adding value to your company’s businesses and this will always be specific to certain types of businesses. This is why Berkshire Hathaway steers clear of high-tech companies, Procter & Gamble exited food, and Wells Fargo kept away from investment banking (until it acquired Wachovia during the recent financial crisis). You may be able to turnover your portfolio rapidly—even within a few months—but it takes years to change your way of adding value to your portfolio through the capabilities that support it. For example, Frito-Lay’s direct-to-store delivery capability, Inditex’s fast-fashion supply chain, and Toyota’s production system took years to hone into true sources of enterprise differentiation. The foundations of a corporate strategy need to be stable enough for long enough to let it work.
Likewise, at the business unit level, it takes time to build a compelling value proposition and the differentiating capabilities to deliver it. Frequently or suddenly changing your target customers or core value proposition creates a moving target. JC Penney is just the latest poster child for what happens when you abruptly change business strategy. Both its customers and capabilities system were put into shock with its sudden switch from promotion-based selling of mostly its own branded apparel to everyday “low” pricing of store-within-store branded merchandise.

Consider the difference between how Nordstrom and JC Penney manage strategy. At Nordstrom, leaders continually challenge the merchandising, store, channel, and all other dimensions of their strategies in a way that takes advantage of the foundational choices that underpin their corporate and business strategies, whereas Penney pulled the rug out from beneath the foundation itself.
Smart strategists enable companies to modify their strategies as their environment and context change. They avoid the mind-set of “We set strategy and then implement like hell.” Their mind-set is: “We implement like hell and never stop challenging our strategy.”

But the ability to do that is based on having a strong foundation. If your company is clear and consistent about how it adds value to its businesses, leaders will make better decisions about the shape of their portfolios. If a company’s leaders understand what comprises its differentiating capabilities, they’ll prioritize their growth priorities to leverage and enhance those capabilities. If the individual businesses within a company are sharp and consistent with regards to their own target customers, value propositions, and differentiating capabilities, its people will make smarter decisions on what to sell, what markets to enter and exit, how to manage new product development, how to manage costs, where to invest, and all the other choices that are inherent in winning customers and market leadership.

Your strategy must change every day or it will fail to keep up. But much of it also needs to remain constant or all those decisions and actions your organization is taking will be diluted by their lack of direction and coherence. The successful strategist knows how to manage this apparent contradiction. Do you?

Growing Future Leaders: Why Western Parents Need to Adopt an Emerging-Market Mind-Set


I remember the lazy days of my childhood summers, languishing in the grass, bored but too tired to move after spending most of the day in the community pool. No summer school for me. When I applied to college, anything above a 3.2 grade point average gained automatic admittance to a University of California school. Nobody asked, or cared, about my (nonexistent) extracurricular activities. And, even amid a recession, I left graduate school with a good-paying job and little concern about security.

The world isn’t so simple now. Although many of us—especially those raised in the U.S.—grew up in a world full of choice, our children are growing up in a world full of competition. We can’t give our children our past, but we can help them create a future by adopting an emerging-market mind-set that creates choices by making them more competitive.

I received a quick schooling in this mind-set recently when I talked to the CIO of a large multinational corporation with operations in more than 70 countries. The executive’s company now sources 65 percent of his technology organization out of Latin America. With the technology market tightening, he has limited options. For the more in-demand technology positions, U.S. talent can expect compensation three times the going rate in Central America. And, get this, he often has to negotiate with U.S. talent through an agent or career coach. At the same time, he views talent from Latin America as “productive and hungry” in contrast with the U.S. millennials who, at times, are overparented, lack “innate spirit,” and, in general, are “wimpy and disrespectful.” All in all, the case for Latin American technology talent is close to overwhelming.

The world has been flat for quite a while now, with companies transforming their operating models to access global talent. Most leaders in the U.S. have witnessed this upheaval firsthand in their companies, but have not transformed their parenting models in kind. My friend the CIO sees American parents obsessing over getting their kids into college but glossing over skills that would earn their kids a job. Meanwhile, in developing countries, parents are much more apt to:
• Raise their kids up with the expectation that they will go into STEM fields, just as parents in the old economy pushed their kids into medicine and law.

• Ensure that their children speak at least three languages. This CIO recounted a story of a family sending their middle-school student from Taiwan to Costa Rica to live with an uncle. This student attended an English-speaking school within a Spanish-speaking country. Upon graduation, he was fluent in the three predominant business languages and culturally astute.

• Instill a value of lifetime learning by encouraging their adult children to pursue their master’s degree in the evenings and read technical manuals and take online courses over the weekends.
The CIO believes “the rest of the world is kicking our butts” because American parents have lost perspective—they encourage their kids to “follow their dreams,” while forgetting to prepare them to compete in a world market. He advises parents not to let their children’s “avocations get in the way of their vocations” and to shift their investments from back flips and ball handling to developing “life skills” that will help them get, and keep, a job.

Reflecting back on my conversation with this executive, I realize that the issue is, first and foremost, about expectations, not education. When I was growing up, my parents didn’t have to teach me how to manage money because we had no money. I didn’t have the luxury of a nonpaying internship, because I needed a paying job. When I finished my education, I took a job where, despite far less-than-ideal working conditions for the first couple of years, I never considered looking for employment elsewhere. My parents were raised by parents who lived through the Great Depression and were taught that anybody who had a job was considered blessed because many did not.
In contrast, many parents in the U.S. today expect their kids to play elite-level sports in high school and college rather than hold down a job, investing thousands of dollars a year helping them do so. As a result, a lot of students graduate out of college with little, if any, work experience, and when they finally enter the workplace, it’s a letdown. I have seen graduates walk away from good jobs after a year or two and move back in with their parents to pursue their dreams. I have recently heard a 24-year-old complain about a high-paying job with a great company because he doesn’t like the industry and the work hours are too long.

My conversation with this CIO shook me up. Like many parents, I have been living in the past. Up to now, I have successfully ignored the pockets of “emerging-market mind-set” that exist in our melting pot: Alice attending Korean school on the weekends or Johnny spending his summer learning how to code. And when my daughter’s principal recommended that students be allowed to choose their own electives, I cringed when my daughter selected photography over robotics, but I did little to influence her to change her mind. Like many parents, I squelched my concerns by paying copious amounts of tuition, in effect, outsourcing the strategic leadership of my daughter’s education and future to some (presumably) more qualified.

We all want what is best for our children, but our best isn’t our past. We need to help our children create their future by transforming our parenting to embrace the emerging-market mind-set of pragmatism, hard work, gratitude, and lifelong learning.

As Branch Rickey, the general manager of the Brooklyn Dodgers who signed Jackie Robinson, said, “The world’s not so simple anymore, I guess it never was. We ignored it, now we can’t.”

Welcome to the Nate Silver Business Model


Since the dawn of the consumer Internet, established media enterprises have been struggling to fully embrace the personal brands of the popular individuals who write or produce for them. Case in point: Andrew Sullivan. One of the Web’s first independent blog superstars, Sullivan took a Homeric journey from Time to the Atlantic to Newsweek/Daily Beast, before finally winding his way back home to running his own branded space, ultimately absent a corporate owner.

In spite of Sullivan’s huge following, none of his adoptive corporate parents could figure out how to sustain a long-term relationship between his big personal brand and their existing publishing models. Apparently, the people who gravitated toward Sullivan tended to read no further; those who preferred the magazines he wrote for often didn’t follow Sullivan. This undermined the potential advertising premium that was the original rationale for bringing them together.

But a strategy taking hold in the world of sports media offers new hope for a permanent reconciliation between personal and corporate news brands. Or at least it might.
With Bill Simmons’s Grantland (owned by ESPN) and Peter King’s (owned by Sports Illustrated), we have seen the emergence of spin-off partnerships that combine the attraction of personal reputations with the breadth and power of corporate-scale marketing. Several factors distinguish Grantland and from the models that failed with Andrew Sullivan. First, the Grantland and TheMMQB projects grew organically out of a long-term relationship between the corporate brand and the individual. Simmons and King built their reputations as contributors to the parent company, not independent of them. Second, although the new properties do leverage the brands “Simmons” and “King,” respectively, each also includes a range of other contributors who bring their own voices to the platforms. Grantland is not “all Bill Simmons all the time.” It is a multifaceted media property in its own right, but one that embodies the spirit of its founder and editor-in-chief. That’s actually a tried and true model for launching new media assets—similar to Oprah’s O or Martha Stewart Living.

These relationships seem to work, at least when there are enough resources behind them—and a lead figure who appears regularly both in his or her personal spin-off and in the legacy enterprise channel. By continuing to participate in their owners’ core programming, these media stars create a virtuous circle: providing direct value to the parent while continuing to broaden their own reputations and driving greater interest in their properties.

All of which brings us to the recent announcement that Nate Silver is leaving the New York Times for Simmons’s home, ESPN (and, thus, reconnecting to his sports roots). The conversations that led to this marriage doubtlessly included a great deal of focus on Grantland, as it appears to be the model Silver and ESPN will follow. In the coming months, ESPN and Silver will relaunch Silver’s website under the ESPN umbrella. But unlike his nearly-sole-proprietor arrangement with the New York Times, in the new iteration “Silver will serve as editor-in-chief of the site and will build a team of journalists, editors, analysts and contributors in the coming months,” according to ESPN’s announcement of the deal. In other words, just like King’s and Simmons’s Grantland, Silver will not just offer his own comments and opinions. He will convene others and build a center of interest.

This model seems to work well in sports, so why not apply it across the news-media landscape? Let’s look more closely at the circumstances that have enabled it. We sports fans—well, not all of us—tend toward the obsessive. We expend obscene amounts of time and untold subscription fees to feed our passion, enhance our waging success, and gain an edge in our fantasy leagues. When a sports writer or analyst captures our fancy, we happily overindulge.

But there is another factor at work here. The Grantland site bleeds beyond sports into other domains. In this way, Grantland attempts to fully mine the value of the Simmons’s brand—part of his appeal has always been how he weaves popular culture into his work. One would imagine that Silver’s relationship with ESPN will push the model even further, connecting sports to economics and politics, with Silver—like Simmons—playing the dual role of corporate-network personality and editor-in-chief of his own property.

The three-way combination of powerful personal brands, strong corporate support and the passion-fueled built-in audience creates the opportunity for these new ventures to gain traction. The unique personalities and interests of their founders give them the chance to retain that audience for the long haul.

Are there other individual stars who carry the brand weight in the right kind of topic area to launch their own thing? The answer to that question is certainly yes. Walt Mossberg and Kara Swisher’s gadget-obsession-fueled All Things Digital has grown into a recognizable franchise within the Wall Street Journal brand.

A deeper question is: Can the right type of personality and franchise create an obsessive topic area where it didn’t exist before—say, in conventional urban journalism or in business news or even in the kind of service reporting that attracts people to a management-oriented website? That may be the crux of the media challenge during the next few years: to attract the obsessive and make it normal. Few partnerships have demonstrated their ability to do this so far, but ESPN, in particular, appears to be giving it a solid go. It would be interesting to see if Entertainment Weekly or E! could make this work with, say, the next Siskel and Ebert, whomever they may be—or less obviously, if the New York Times could crack the formula when it comes to providing a window on current events.

India’s Leadership Challenge


At many Indian companies, the development of top management has lagged behind the pursuit of technical excellence.

A significant number of Indian companies have experienced impressive growth during the past two decades. But today, many face a daunting side effect: a nationwide crisis in leadership. In some ways, Indian companies are victims of their own success. As one senior HR manager at a large private-sector conglomerate explained, “People have been so focused on growth that they have not invested in developing [the next generation of executives]. There is a strong circle of top leadership in our businesses, but no tag team.”

Recent survey data supports this claim. In a 2010 study by Harvard Business Publishing, an overwhelming 88 percent of top Indian companies cited “gaps in [their] leadership practice” as their top challenge in coming years. The 2012 ManpowerGroup Talent Shortage Survey, a global survey of employers, reported that 48 percent of respondents based in India had difficulty finding qualified candidates for their senior managerial positions. And Booz & Company (the publisher of strategy+business) forecast in a recent in-depth analysis of India’s top 500 companies that by 2017, 15 to 18 percent of leadership positions in those companies will be unfilled—or will be filled by people underprepared for the jobs. This implies that companies will be missing almost one of every five leaders they need, putting both potential growth opportunities and the continuity of existing business operations at risk (see Exhibit).

Several underlying causes have contributed to this breakdown in India’s corporate leadership pipeline. Considered together, they explain how Indian companies have arrived at their current precarious position. Understanding these factors can reveal the opportunities that today’s senior executives can use to set things right. It can also provide helpful insight to executives in other emerging economies, many of whose companies are also suffering from a senior executive talent shortage.

Shifting Realities

About 65 percent of India’s 1.2 billion people are between 15 and 64 years old, and 30 percent of the population is made up of those younger than 15. This widely recognized “demographic dividend” should have given Indian companies a significant advantage in the form of a sizable pool of qualified applicants. But the country’s youth-dominated population has thus far fallen short of its promise. Nandan Nilekani points out in his book Imagining India: The Idea of a Renewed Nation (Penguin, 2009) that India lacks the educational institutions it needs, from the earliest years to the post-college level. Thus, even though thousands of Indian university graduates enter the workforce every year, they are often not “industry ready” or equipped in the skills of global business. This has contributed to a dearth of topnotch candidates and a growing talent war for those few with desirable skill sets.
Young talent needs development and supervision. And as Indian companies have expanded their reach both domestically and abroad, the lack of managers capable of providing this guidance has become more acutely felt. The founding executives who built these thriving businesses, and who made the far-reaching strategic decisions in the past, are now approaching retirement. According to the chief executive of a large private-sector financial-services company in India, the country’s economy is growing at a faster pace than the rate at which the leadership pipeline is maturing. A decade of rapid expansion and exponential growth has left companies in deep need of talent that is in short supply.

This dynamic is all the more daunting because operating models at many Indian companies have shifted. Traditionally, Indian companies operated in a markedly top-down manner—the person with the corner office made the final decisions, and senior managers oversaw their specific silos. That top-down model was efficient, but it stifled creativity and discouraged autonomous decision making. Now it is giving way to a more participative approach, more resonant with the younger generation and more effective for companies that are too big to micromanage. But this new operating model can be effective only if skilled managers are available to fill the ranks.

Looking for Leaders

India’s young, underprepared population, its rapid economic growth, and its changing business models are the most visible contributors to its leadership deficit. But there is a subtler yet equally powerful underlying cause: Historically, Indian business leaders have focused on developing technology rather than people. As a senior manager at a large Indian conglomerate put it, “We have quality technical experts, but can’t convert them into business leaders.”

Perhaps the most obvious example occurs in the C-suite: Few companies have provided human resources a seat on the executive management committee. As a result, the HR department often has a limited role (or no role) in the strategic planning process, leading to a lack of focus on people matters. As U.S. companies did in the early years of the Silicon Valley boom, Indian companies have prioritized achieving technical excellence, hiring engineers who’ve been trained to pursue innovation—but not to manage people and lead organizations. Evidence of this dynamic can be found in practices prevalent throughout Indian companies.

Insufficient training for new recruits. Many Indian companies struggle with new-hire “onboarding” programs. Often, the incoming class of MBA recruits is not sufficiently integrated into the broader workforce, and companies put too much hope too early on these new hires’ shoulders.
Meanwhile, rotation programs meant to train the new recruits are often ill conceived and seen by line managers as an intrusion into daily work. “Corporate has assigned two MBAs to my department for rotation—I don’t know what to do with them,” said a department head at one midsized Indian company. “My people are already overworked with their routine work. We do not have the time to train these overpaid young recruits.”

Limited variety of experience at the top. Without a strong leadership pipeline in place, star functional specialists are typically promoted to top roles. These individuals may have a background focused within one domain, and may not have had the opportunity to develop a broader perspective or set of skills.

This experience gap is not a problem just for Indian companies; it is endemic to corporate structures everywhere. Many global companies compensate with targeted on-the-job experiences and in-depth training, where they bring senior executives together to help develop one another’s skills. But Indian companies have invested little in this type of executive development. Thus, when functional specialists are promoted into general management positions, few are well prepared and motivated to handle their new roles.

A lack of succession planning. Rapidly growing industries, such as those driven by the rise of digital media, often rely on relatively young and inexperienced managers to take on senior positions. By and large, these individuals have not yet developed a leader’s perspective. For example, the telecom boom over the past decade has led to a flurry of flourishing mobile phone brands in India. But each of these firms has had to draw upon the company’s existing pool of players to build its senior team. The growth of that talent pool has not kept pace with those of the brands. One regional sales head for a mobile handset company pointed out that “eight to 10 years ago, there were only three or four handset brands in the country. Today, there are over 60. Relatively younger managers have had to step up to take on top roles in these companies.”

The ultimate result of this lack of qualified successors? Senior leaders are postponing retirement. Instead of developing and executing a clear succession plan, executives have been extending their tenure, lacking confidence that the next level of management is up to the task of leading.

The Next Generation

Many Indian executives recognize the challenges, but are unsure what steps to take to overcome them. First and foremost, they need to take a fresh, holistic look at their leadership development practices. Their goal should be to develop a sustainable leadership pipeline throughout the organizational pyramid: a well-rounded leadership team to complement the required skills at the top, a team of successors right behind them, a strong bench of high-potential individuals identified and developed in the middle, and a cadre of young, industry-ready talent. The pipeline should also include advancement opportunities for technical specialists.

This is no small task, and will require executives and managers to embrace the idea that training young recruits is an essential part of their routine, and will provide the incentives for them to contribute to the organization. Companies will need to invest in replicating and implementing specific interventions that have been successful at global companies (and a small number of Indian companies), instead of generic initiatives. This means making talent management a key component of HR strategy, and making HR a key participant in the firm’s decision-making processes.
By taking these steps, companies can fill their immediate gaps while building the enterprise capabilities necessary to ensure that they thrive in the long run. But only in companies whose leaders endorse this approach wholeheartedly, and where it can become ingrained in the company’s culture, will such changes take hold. Talent is India’s greatest opportunity, but it is also one of its biggest challenges. The same is true for more and more businesses in other developing regions around the world. In each of them, it falls to today’s executives to ensure strong leadership for generations to come.
Reprint No. 00178

Author Profiles:

Persuading Consumers to Sign Long-Term Contracts

Companies that focus on driving customer usage and spending see their conversion rates increase.

Title: Strengthening Customer Relationships: What Factors Influence Customers to Migrate to Contracts? (fee or subscription required)
Authors: Yolanda Polo and F. Javier Sese (both University of Zaragoza)
Publisher: Journal of Service Research, vol. 16, no. 2
Date Published: May 2013
Although contracts have become widely used in recent years, pay-as-you-go consumers still account for a large portion of the customer base in many industries and businesses, including legal services, media, telecommunications, repair and maintenance, and entertainment or professional sports. A 2011 study of U.K. and German mobile phone firms, for example, found that more than half of their customers had a prepaid plan and were not tied to a contract.

That’s a problem for companies, because there’s no question that subscribers are more profitable. On average, they generate 4.5 times more revenue than noncontract customers, according to the study. It stands to reason, then, that a small uptick in the number of customers who sign on the dotted line would lead to a significant increase in revenue for companies—including those in business-to-business contexts such as tech support or consulting. However, despite contracts’ clear value to firms, surprisingly little research has been done on how managers can strengthen their companies’ ties with customers to encourage them to sign long-term deals.

This paper aims to fill the gap by identifying the key factors that lie behind customers’ decisions to transition from pay-as-you-go to contract status. Noting that their findings are applicable to several industries, the authors based their study on cell phone users, in part because of the massive size of the mobile market. Because so many people have more than one cell phone— for personal use and/or business—penetration rates have actually surpassed 100 percent in most developed nations, and the market is still growing. The authors were also drawn to this sector because the contract problem is particularly vexing for telecom operators, who shoulder huge operational costs and face stiff competition for customers, which makes the negative impact of weak and short-term client relationships all the more damaging to their bottom line.

The authors tracked nearly 300 customers, all of whom began as pay-as-you-go clients, of a major mobile communications supplier for four years, gathering user and account data on a monthly basis. About 22 percent of the customers moved to a contract and 78 percent stuck with their pay-as-you-go phone cards, which shows how difficult it can be for firms to secure long-term commitments.

In a series of analyses, the authors found that the first key factor in the decision by customers to make the switch was whether they exceeded their expected usage: Did their usage regularly exceed the amount of credit they loaded on their cards, and, if so, how big was the gap?

The clear implication for telecom companies, and other types of service providers, is that they can increase the likelihood that customers will sign contracts by getting them to use their service more during the pay-as-you-go period.

In the mobile phone market, for example, companies should encourage their pay-as-you-go customers to install social media applications, online games, or other time-consuming programs that would increase their mobile service use. In other industries, offering discounts, promoting free trials, and bundling services with partner firms are all viable strategies. In addition, employed, female, and younger customers all had usage rates that exceeded their own expectations, so these groups should be among the first targeted by marketers, the authors write.

The second factor influencing the decision by customers to switch to a contract was a variation of the first: The more customers paid when not on a contract, the more likely they were to see the benefits of a long-term deal and make the switch. This doesn’t mean, however, that companies should simply raise rates for noncontract clients, the authors write; over the long term, the higher prices would likely drive away potential customers or cause existing ones to leave. Rather, managers hunting for contract contenders should begin by focusing on customers with a history of higher spending. Once they are identified, these customers should be plied with inducements to exercise their bigger spending habits during the noncontract phase. Companies should offer points for frequent usage in a loyalty program, among other incentives.

Last, customers who had had a longer noncontract relationship with the firm showed a higher probability of joining the contract program, the authors found. Thus, retention strategies and effective customer service are crucial. Although keeping long-standing low-end customers happy with good service is important, companies should keep their eye on the real goal: Strengthening these ties to convert them into more profitable contract-based relationships.

The authors stress that these managerial and marketing insights can be applied more generally to other industries. Internet-based phone companies, music streaming websites, file hosting services, and new-media businesses such as online newspapers and magazines are all facing the same challenge. These findings highlight the need for companies to encourage higher usage and spending during the pay-as-you-go phase.

The recommendations also extend to B2B firms, the authors write. For example, companies specializing in consulting, computer-related support, or legal services can team up with complementary firms to give customers easier access and more opportunities to use services.
“Marketing managers should move from the prevailing backward-looking focus toward a forward-looking focus,” the authors write, “in which each customer’s future considerations are monitored and managed proactively.”

Bottom Line:
Companies can lay the groundwork for customers to sign a contract by tracking and influencing their use of the company’s services in the pay-as-you-go phase. Although getting customers to make the switch is tough, it’s worth the effort because it is so profitable. Companies should target customers who have longer relationships with the firm, spend more during the noncontract phase, and have reason to think they will use the service frequently enough to offset the higher costs of a contract.

Author Profile:

  1. Matt Palmquist is a freelance journalist based in Oakland, Calif.