Author: Rajesh Jain

An Entrepreneur based in Mumbai, India.

India needs War Cabinets (Part 4)

Governance needs vision, will and expertise. Politicians are good at winning elections because they are able to gauge the pulse of the people and offer promises to a minority (termed as the “selectorate” by Bruce Bueno de Mesquita) that is good enough in a first-past-the-post system. But that does not prepare the winning leaders for good governance. That ends up in the hands of the bureaucrats. All one has to do is to watch “Yes, Minister” and “Yes, Prime Minister” to know how the bureaucrats play the stalling game.

In the US, the elected President comes with thousands of new staff – many sourced from think tanks and the private sector. They bring in a fresh outlook and new ideas. Many come with experience from having built and run large organisations. In India, we have no such luck. We have career politicians – many of them second- and third-generation. The only way they know how to get things done is by either fear or favour.

The politician-bureaucrat jugalbandi is ill-suited for this moment in time. What India needs is transformational leadership – and that needs new talent, which in turn requires trust.

Trust is a very important attribute for management. If I don’t trust others, I will not delegate and will constantly second-guess the intentions of those working with or for me. The result becomes extreme centralisation. Those around me will soon understand this – and therefore hesitate to volunteer their own opinion, and eventually I will end up being surrounded by yes-men. Those with independent opinions will either keep their counsel to themselves or quit.

We see this form of extreme centralisation in governments at all levels in India. Strong leaders win elections, but they do not necessarily trust others. In politics, trust is not important to rise to the top. But governance necessarily needs trust. Else one ends up with single-person autocracies (or dictatorships) with everyone else simply endorsing decisions made by the Supreme Leader.

That may work fine when things are going fine, but falls apart when crises happen. It is at those times when the leaders have to reach out to the best minds and heed their counsel. The pandemic has created just such a crisis in India. If the past two months are any indication, we have a serious vacuum in good decision-making across most governments in India. India needs the trust-talent-transformation chain. That is why there is a need for a “war cabinet” – a team formed by the best experts so decision-making can be done right through the war we are all living through and for making the big changes that India so desperately needs in the near future.

Tomorrow: India needs War Cabinets (Part 5)

India needs War Cabinets (Part 3)

What is a war cabinet? Here is a definition from Wikipedia: “A war cabinet is a committee formed by a government in a time of war. It is usually a subset of the full executive cabinet of ministers. It is also quite common for a war cabinet to have senior military officers and opposition politicians as members.”

The most famous war cabinet was the one created by Churchill during World War 2. From Wikipedia again: “The Churchill war ministry was the United Kingdom’s coalition government for most of the Second World War from 10 May 1940 to 23 May 1945. It was led by Winston Churchill, who was appointed Prime Minister by King George VI following the resignation of Neville Chamberlain in the aftermath of the Norway Debate. At the outset, Churchill formed a five-man War Cabinet which included Chamberlain as Lord President of the Council, Clement Attlee as Lord Privy Seal and later as Deputy Prime Minister, Viscount Halifax as Foreign Secretary and Arthur Greenwood as a minister without portfolio. Although the original war cabinet was limited to five members, in practice they were augmented by the service chiefs and ministers who attended the majority of meetings.”

The Australian Prime Minister Scott Morrison set up a war cabinet as early as March 15 to tackle the impact from the coronavirus. From The Saturday Paper (March 21): “The newly convened wartime-style national cabinet – with Morrison, the state premiers and the territory chief ministers – met for the second time in four days. The group includes five Labor members and four Liberals… The national cabinet now meets by teleconference every Friday, and more often as required… “Whatever we do, we’ve got to do for at least six months,” Morrison said. “Six months.””

At this time when India faces two (and perhaps a third) crises, India needs to put together war cabinets at all levels – and not just with people from across political parties, but staffed with experts. The healthcare crisis will persist for the next few years – India will need a huge augmentation in hospital beds and medical care at every level. The economic crisis will set India back many years. The government response has been woefully inadequate. And a third crisis may be emerging – the Chinese incursions into Indian territory in Ladakh.

Each of these crises requires expertise to tackle. Politicians and bureaucrats in India have been found wanting even during peacetime. The situation we now face is unprecedented and war-like – the concomitant interplay between the medical and the economic, between lives and livelihoods, between fear and hope. Extraordinary times call for extraordinary decisions – and these will not be made by Indian politicians and bureaucrats whose decision-making has been singularly flawed for the most part since Independence.

Tomorrow: India needs War Cabinets (Part 4)

India needs War Cabinets (Part 2)

The stark economic reality is now staring at us – high unemployment, migrants facing misery and poverty, many businesses facing extinction. Economic webs and supply chains are like glass – once broken, they cannot be put together again. And yet, India kept persisting with lockdown after lockdown.

This is what Ruchir Sharma wrote in the New York Times a few days ago: “By mid-April, many rich countries had started to debate reopening their economies, and protests were breaking out against lockdowns in several major U.S. states. In India, there was little public debate, much less protest. The hardest hit, the poor and unemployed, seem to accept their misery as fate, no doubt unaware of evidence showing the more stringent the lockdown, the more severe the economic damage. Some estimates suggest that India’s economy could contract by nearly 6 percent this year, making this the worst downturn in the country’s post-independence history.”

Only a few states got their act together on the health infrastructure – which has been an area of huge underinvestment by every Indian government over the past 70+ years. And on top of that, we have dislocated livelihoods and dismembered enterprises. As a friend put it to me, this is “murder by policy.”

Now, we are finally starting to say that we need to ‘learn to live’ with the virus. But the fear that has been instilled will take a long time to go. No political leader is willing to say publicly that the virus is not as fatal as was made out to be, and we need to take basic precautions and fully open India for business. Yes, we will see a spike in deaths – but that happens every time there is an outbreak of a disease. The vaccine is not coming anytime soon. The faster we resume normal life, the better it is for all of us – especially the most poor and vulnerable, for whom poverty, hunger and starvation will be much more harmful than the virus itself.

We need to shift the focus to jobs and incomes, to rebuilding India from the looming impact of the Third World War that was started by the pandemic but made worse by government actions. We need to stop the round-the-clock coverage of cases, tests and deaths on national and social media. This has magnified the fear that was initially instilled in the people by the politicians. We need to un-fear the people and unlock the nation.

Prime Minister Atal Behari Vajpayee is famously said to have asked after a presentation was made to him about the various reforms that India needed to do to get on a 10% growth path – “Magar yeh karega kaun?” (But, who will do it?) This is the same question we need to ask as we now face the daunting task of bringing India back on track after a terrible sequence of decisions by political leaders at every level.

This is where I would like to propose something different for the “karega kaun” problem: the need for war cabinets at every level of government.

Tomorrow: India needs War Cabinets (Part 3)

India needs War Cabinets (Part 1)

When we look back at how India handled the coronavirus, the decisions to repeatedly extend the lockdown after April 14 will rank among the worst in Independent India – right up there with the choice of a Constitution that mirrored the 1935 Government of India Act, under-investment in school education in the 1950s, the central planning and socialism turn, the licence-quota-permit raj, nationalisation of banks and insurance in the late 1960s, Emergency, the elimination of property rights as a fundamental right in the 1970s, the lost opportunities at opening up the economy fully after the 1991 crisis, and demonetisation in 2016.

The first lockdown on March 28 was important because there was a need to get the health infrastructure ready to cope with the increase in cases. By early April, it was clear that while the virus will lead to a spike in deaths, it was not as fatal as it was initially assumed. We are now in Lockdown 5.0, euphemistically called Unlock India 1. The successive lockdowns after that were driven because the politicians and bureaucrats who were making the decisions quarantined from the real world, experts and common sense.

For the record, I wrote about the need to unlock India in early April:

Let me start by saying that every life is important. As family members and citizens, we are duty-bound to take care of our near and dear ones, and others around us by following rules. Yet, despite all this, 9 million Indians die every year. That is about 24,000 daily, and 1,000 every hour. Let’s say that again – 1,000 Indians across the country die every HOUR. Some die of natural causes, others in accidents, and so on. We do not and protect every one of those deaths. We do take care – we have home care, medicines, hospitals, seat belts, helmets, and so on. And yet, the reality is 1,000 Indians die every HOUR.

What research has shown so far is that Coronavirus can be fatal for about 5% of those infected. It is especially dangerous for those over 65 years of age and having pre-existing medical conditions. The virus also spreads rapidly – it has a reproduction factor of 3-4, meaning that one infected person can infect 3-4 others, leading to exponential growth in infections. Many of those infected may not even show any symptoms – they are asymptomatic. A small percentage will need medical care, and an even smaller percentage will require hospitalisation.

To put this in context, the impact of the virus will lead to an increase in deaths over the next year in India. Even at the upper end of estimates, this is still expected to be much lower than the 1.5 million deaths each year from cardiac arrest. One more disease, some more deaths. We could lose a near or dear one also. We will be angry if they could not be saved.

The question to ask is: given the high rate of infection and spread (which will probably be hard to stop given that we may see multiple waves), and low fatality rate – can Indians afford to sit scared at home for the next many months and avoid all contact with each other when there is no guarantee that the virus itself will disappear even as medical science makes the best efforts? If so, why don’t we sit at home to avoid possible deaths on train tracks and on the road? Can we really afford to harm our own future in the way we are going about it right now? Even as we try and save lives from the virus, what about the lives, livelihoods and futures we are destroying because of the economic pandemic? Are we making the cure worse than the disease?

That was written on April 6 – almost two months ago. Even now, the political leadership in India at all levels has not fully grasped the gravity of the healthcare crisis and the economic devastation that lies ahead.

Tomorrow: India needs War Cabinets (Part 2)

Me on Mumbai’s Mojo in Mint

Smruti Koppikar interviewed me for her article in Mint: “A battered Mumbai is trying to regain its mojo.”

The key condition, according to Rajesh Jain, founder and managing director of Netcore, is for the 24×7 coverage of covid-19 in the media to be tapered off. “This will immediately reduce fear,” he said, “Then the government should upgrade health infrastructure so that people are assured of care if infected, and then introduce reforms to restart the economy.”

Among the reforms Jain prescribes are “Dhan Wapsi” or raising resources from public lands, creation of Special Economic Zones, and a mayor answerable to Mumbaikars. “There is big economic devastation. We will have to rebuild the economy and learn to live with the virus. It isn’t going to say goodbye to us at 5am on July 1st,” Jain added.

Here is what I had written in my Mission 10-20-30 series: “India’s cities need to be freed from the clutches of the Central and State governments. Cities are where wealth creation happens. Cities are where poor people want to migrate in search of opportunities. Over the next 15 to 20 years, 40 crore Indians will leave their villages and move to cities in search of a better future. Swantantra Cities will have directly elected and empowered mayors as the starting point for urban governance reforms.”

Becoming Chief Profitability Officer (Part 9)

We began this series with a simple premise: in the post-Covid world, Profit will become the fifth and most important P of marketing. Not just the CMO but every CxO will need to become the Chief Profitability Officer.

These timeless words by Peter Drucker reinforce the need for innovation in marketing: “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

A new set of marketing ideas can help drive profitability. The starting point for all these ideas is the customer data platform (CDP) – which collects customer data at every touchpoint and stores it for easy access, analysis and action for the marketer. By applying data science and determining Customer Lifetime Value (CLV) and mapping the Best Customer Genome (BCG), brands can enter the world of Velvet Rope Marketing (VRM) to maximise revenue from their Best Customers. This is the surest path to growing profits.

We also discussed two additional marketing approaches: Median Customer Marketing and Long Tail Marketing. Both can augment VRM to add incrementally to profits.

Here is an overview of the ideas discussed:

Profits are oxygen for a business. In the new world that is being created, companies that are on the path to profitability will be the winners. The new marketing ideas that we have discussed in this series can help businesses lay a solid foundation to emerge victorious in the new future. Are you ready to don the title of Chief Profitability Officer for your business?

Becoming Chief Profitability Officer (Part 8)

Here are some excerpts from a post I had written in 2008 about the idea of “invertising” (invited advertising):

Let us think about marketing today. Companies advertise across multiple media to reach their target audience. Every time they have something new to tell their target segment, they re-advertise. Advertising is thus a continuous process. Media companies love this because they make money every time companies need to reach their audience. Some companies try and get past this by creating loyalty programmes and newsletters which they then send out regularly. Now, with an increasing number of users having mobiles, sending SMSes is another extension of the marketing campaign.

What is wrong with this picture?

First, the whole process of discovery and re-discovery. Existing media companies have little or no incentive to enable the creation of a relationship between the customer and the vendor – because that threatens their role as an intermediary. They want the customer to be ‘discovered’ via their media vehicle – each time.

Second, the lack of knowledge of what marketing works. In today’s media campaigns, it is not easy to track the actual impact on sales (or even customer footfall in the store). Internet-based campaigns do enable tracking – but that only works for online stores.

Third, the lack of an emotional connection. It has been said that marketing is a conversation with the customer. But hardly anyone seems to be doing this. There is no bond being created. The question a brand must ask: how can I become a daily utility in the life of my customers?

Fourth, there is no easy way for the customer to convert advertising that is seen into information that he wants. There are many occasions when customers want to stay updated on specific things, but businesses have no easy way of providing them that info. Newsletters can be done, but they are not personalised – and do not necessarily guarantee anonymity from the customer’s viewpoint.

Fifth, it does not take into account that pretty much everyone capable of buying has a mobile phone. Our estimate is that 80-90% of customers today are likely to carry a mobile phone. The mobile is a two-way interaction device, but companies are not using this appropriately.

Finally, the customer can be a champion, and facilitate viral marketing. The customer can be a connector – sharing things that are useful with others in the social network. This is because all of a customer’s contacts are accessible near instantly via the mobile phone’s contact book.

It is clear that marketing and business-to-customer interactions are likely to undergo a sea change in the coming years. In the developed world, perhaps the most important change in the past few years has been brought about by the Internet and pay-per-click (pay for performance) advertising. This advertising is contextual – either linked to search or the content on a page. In the UK, 12% of advertising spend is now being done online (the PC Web). In India, the same is unlikely to happen for two primary reasons: the computer penetration is still quite low (coupled with limited connectivity options), and the rapidity of innovation is making the mobile as the primary access device for people. Thus in India, the levers for shifts in marketing are likely to be centred around the mobile.

As we look ahead and address the limitations of today’s marketing methods, the mobile will emerge as the fulcrum for the new options. Companies which recognise and adopt mobile marketing are likely to see significant early benefits – and lock their competitors out in the customer attention game. Tomorrow’s world of mobile marketing is going to be built around three tenets:

  • Publish-Subscribe: Companies will publish and continuously update various information streams (think of them as ‘feeds’). Customers can subscribe to any of these streams and then receive updates as soon as new items are published on the feeds. Customers can also stop subscriptions to the feeds anytime. Publish-subscribe ensures a spam-free world for customers.
  • Multi-Modal Viewing: Customers can chose to view the content in any manner – via SMS, email, voice, desktop browser or mobile browser. The experience is seamless.
  • Instant Sharing: Customers can themselves become publishers, choosing to share what they have received with their social networks.

Taken together, the three will create the platform for seller relationship management (SRM) and invertising.

Invertising, appropriately modernised for the smartphone world, can be a very useful idea for getting customers to activate relationships with brands – and thus identify themselves to the brand. The unknown and anonymous customer becomes known and familiar. Brands now have a hotline to their customers – and can thus reduce the frequency of advertising for repeated purchases.

Tomorrow: Becoming Chief Profitability Officer (Part 9)

Becoming Chief Profitability Officer (Part 7)

The Best Customers make up the head of the CLV curve. The bottom 50% or so of customers in most circumstances make a negative contribution to profitability. These ‘Test Customers’ make up the long tail. While the easy solution could be to think that a brand may be better off without these customers, it is not as simple as that. This is where Long Tail Marketing comes in.

We can think of the long tail of customers as comprising of one or all of the following:

  • The bottom 50% of customers
  • Leads who have not yet matured into customers
  • Offline customers who are unknown to the brand

Each requires a different strategy.

Here are some ideas for the bottom 50% of customers:

  • Generate more transactions and reduce service costs via ‘multiple and wide nets’
  • Possible segmentation: value customers (coupon/discount) or niche buyers
  • Capture additional data at time of (first) transaction
  • Use martech to ensure tech-led engagement to reduce service costs
  • Capture engagement data and work towards replica of BCG

For better conversion of leads (relevant for brands which are freemium, subscription-based or driven by 1-time purchases), Long Tail Marketing can be thought of as Conversion Rate Optimisation (CRO). Here are some ideas for leads:

  • Analyse past data to build Ideal Customer Profile (ICP) – which will be similar to BCG
  • Same BCG and VRM ideas are applicable by tweaking model
    • Customers 🡪 Leads
    • Transactions 🡪 Engagement
    • CLV 🡪 Lead Conversion Score
    • Best Customers 🡪 Ideal Leads

For the offline customers who are unknown to the brand, there needs to be an activation process by which these customers can identify themselves to the brand. This process necessarily is via an opt-in. It is even more important in the post-Covid world when brands will need to shrink their marketing budgets. An idea I had thought about many years ago is that of “invertising” – where customers invite advertising from brands into their lives. It is an idea worth revisiting in today’s context.

Tomorrow: Becoming Chief Profitability Officer (Part 8)

Becoming Chief Profitability Officer (Part 6)

As discussed earlier, there are three tracks to grow profitability:

  • Velvet Rope Marketing for the top 20% (Best Customers)
  • Median Customer Marketing for the middle 30% (Rest Customers)
  • Long Tail Marketing for the bottom 50% (Test Customers)

We have discussed VRM and how the combination of CDP, CLV, BCG, Martech and Adtech can help brands identify Best Customers, provide them a Velvet Rope experience, acquire more like them and help the newly acquired customers to become Best Customers faster.

Let us now turn our attention to the middle 30% — what I have termed as the “Rest Customers.” These are customers who have a lower CLV than the Best, are still profitable for the brand, but perhaps not as loyal or valuable as the Best. These can also be termed as “median customers” – not at the top or at the bottom of the CLV pyramid. Hence, I have used the term “Median Customer Marketing” to identify the initiatives for this segment. What can be done with these customers?

There are two activities that can help grow profitability from the Rest Customers – nudging them to the “next best action” and identifying future Best Customers by analysing the genomes for each of them.

Here is a brief on next best action marketing from NGData: “The concept of delivering the right message to the right customer, at the right time, and via the right channel has been around for some time. Next best action marketing can best be described as an evolution of this concept, evaluating the customer’s past behaviour, recent actions, interests, and needs in the context of the organization’s marketing goals to identify the most effective action (making an offer, a promotion, reaching out by phone, sending an email, etc.) to achieve desired outcomes.”

Here is additional info from Optimove: “Next best action marketing (NBAM) is a customer-centric approach to marketing in which the goal is to address each customer with the marketing treatment most likely to generate the desired result. NBAM differs from other marketing approaches in two key respects: (1) it is customer-oriented instead of being product-oriented, and (2) it aims to approach each customer within the context of their unique behaviours, needs and preferences instead of by assuming all customers (or large subsets of a customer base) will respond similarly.”

What needs to be done is to identify where a customer is along the journey and use a martech solution to nudge the customer with a specific action. This action can be identified by looking at genomes of similar customers and identifying what they did next.

A similar genome analysis can help identify customers who could have the potential to be moved to a higher spend with the brand. This is important because there will always be some churn from among the Best Customers so creating a pipeline of future Best Customers becomes important.

Tomorrow: Becoming Chief Profitability Officer (Part 7)

Becoming Chief Profitability Officer (Part 5)

To summarise the story so far:

  • Brands should collect customer data at every touchpoint and store it in a CDP
  • Transaction data can be used to determine CLV
  • CLV can then be used to segment customers and identify the Best Customers
  • All the other data (behavioural, demographic) about customers can be used to build the Customer Genome

By looking at the Customer Genomes of the Best Customers as determined by their CLV, it now becomes possible to identify the Best Customer Genome (BCG) – those attributes and actions common to the most valuable customers of a brand.  (As far as I can tell, this is a new idea.)

The BCG is important because a small fraction of the customers account for a disproportionate share of revenues and profits of a brand. Knowing how these customers are different lets us replicate their attributes in acquisition and behaviour in the onboarding process to ensure that brands can manufacture more Best Customers.

BCG is not a static set of attributes. Like in the real world, there is continuous evolution. In this case, it is AI-ML that can help with this process. The models keep learning about what makes a Best Customer by looking for patterns in various types of data made available through CDP, and thus keep improving on the definition of the BCG.

These twin ideas of CLV and BCG lay the foundation for Velvet Rope Marketing as can be seen in the graphic below:

CLV and BCG are the anchors for doing VRM right, which in turn is the key to growing profits. A martech platform integrated with adtech is the best friend of the Chief Profitability Officer to help in executing the four key jobs we had identified earlier:

  • Identify Best Customers
  • Give them the Velvet Rope Experience
  • Acquire more like them
  • Help them become Best Customers faster

 

This is the essence of Velvet Rope Marketing: using data to create a differentiated experience for the Best Customers to ensure maximum wallet share via smart cross-sell and upsell, and churn elimination.

The idea sounds surprisingly simple, and yet very few companies actually do it right. In the post-Covid future, CxOs who can get VRM right can look forward to a profitable future.

Tomorrow: Becoming Chief Profitability Officer (Part 6)