Becoming Chief Profitability Officer (Part 1)

“There are decades where nothing happens; and there are weeks where decades happen.” – Lenin

In the US, e-commerce penetration as a percentage of retail sales grew from 5% to 16% in the ten years from 2009 to 2019. And then came coronavirus. In 8 weeks, the 16% rose to 27%. A decade of change repeated in 8 weeks.

We are living through extraordinary times. In India, we have seen four successive shocks in the past two months. First came the pandemic. Then, the lockdown. This led to a complete demand collapse for many industries and businesses. And finally, the government actions (or lack of them) which have compounded the problems.

Now, two months after the lockdown, there is no sign of “flattening the curve” as cases keep rising across many parts of India. Much of economic activity remains shut down even as efforts are finally being made to open up the economy. (For the record, I had written about the urgent need to Unlock India early in April.) Migrants who had come to cities in search of a better life have been making their way back to their villages. Layoffs are now starting to happen. Work from home has become the new normal for many employees. Even as medical challenges overwhelm cities like Mumbai, the full horror of the coming crisis is slowly becoming apparent.

For business leaders, there is no playbook which could have prepared them for these times. The post-Covid future is now revealing itself. Capital is going to be constrained, profits are coming under severe pressure, marketing budgets are being minimised and the customer is going digital in the wake of social distancing norms. A new normal is emerging – one which is here to stay.

For Chief Marketing Officers (and in fact all CxOs), it is time to think of the 5th P of Marketing. To Product, Price, Promotion and Place, they all need to think of Profit. Because without profits, there will be no business. In the post-Covid world, we all must become Chief Profitability Officers.

Tomorrow: Becoming Chief Profitability Officer (Part 2)

India’s Mission 10-20-30 (Part 12)

Here is the video from the Charcha 2020 where I spoke on Mission 10-20-30.  I start speaking at 1 hour 7 minutes into the video – for 14 minutes (have linked the video to that). This is followed by Rahul Basu’s presentation for 15 minutes, and then Q&A for about 25 minutes.


India’s Mission 10-20-30 (Part 11)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

India faces many crises. We can continue on the suicidal path or use the pandemic to create a new India, a rebirth. We can choose our existing rulers or change the rules to ensure different outcomes. We can continue with kakistocracy (a government of the least qualified and the most corrupt) or create a genuine democracy where the voice of the people is heard. We can choose to stay on the road to serfdom or get on the path of freedom. We can live in poverty or make prosperity our new destination.

These are the choices we face. We can stay with the old or ring in the new. This is the Nayi Disha we need in India. It is time for an Indian Revolution – which does away with the old ways and creates a new system and future. The crisis that the pandemic has created, the Third World War we have been thrown into, the pain that we are presently enduring – it can lead to a happy ending if we are prepared to change direction.

This will require extraordinary vision and leadership at the highest levels in India’s government. It will also require people to come together and accept the change that we know can transform our future. We know there is no going back to the world that existed just a few months ago. We may not know the new world that lies ahead of us – but if we learn from the successes of other nations, we can start on a new journey.

We did not ask for the pandemic. It is here. We cannot question the why of the pandemic. The only questions we should ask as we contemplate the future are, “If not us, then who? If not now, when?”

The answers we give and the actions we take will determine the India that emerges from the Third World War. Mission 10-20-30 is the one big idea to take us to a future of freedom and prosperity.

Tomorrow: India’s Mission 10-20-30 (Part 12)

India’s Mission 10-20-30 (Part 10)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

Mission 10-20-30 is about focusing on a single theme – job creation. It is about making transformational changes to ensure the creation of good jobs in the coming months and beyond. It is about freeing the people of India from the controls put on them by successive governments over the past 70+ years. This is the Sampoorna Swatantra (complete freedom) we need. Done right, Mission 10-20-30 is the Nayi Disha we need to lift hundreds of millions out of poverty in the coming years and put India on an irreversible path to prosperity.

“Even the smallest person can change the course of the future”, wrote JRR Tolkien in his book, “The Lord of the Rings.” For India to embark on Mission 10-20-30, even as we hope for our political leaders to make the right choices, we can use the power of India’s voters to put pressure on the politicians.

Of India’s 90 crore eligible voters, 30 crore are steadfast in their support for one of the existing political parties. But there are 60 crore who are not – there are 30 crore non-voters, and another 30 crore are non-aligned and make up their mind on whom to vote for just days prior to voting.

The impact of the pandemic will also force a change in the way campaigns are done – politics will also become digital. This can level the playing field for independent movements to take up established parties. Unity and pressure from these 60 crore voters can help make Mission 10-20-30 a reality.

Tomorrow: India’s Mission 10-20-30 (Part 11)

India’s Mission 10-20-30 (Part 9)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

Wealth creation will be driven by entrepreneurs and private enterprise, and not the government. For too long, India’s government has put roadblocks for entrepreneurs. Every one of those bottlenecks must be removed – India’s entrepreneurs need freedom. The constraints need to be put on the government, not the entrepreneurs. The government does not create wealth; entrepreneurs do.

The starting point needs to be real reforms – land, labour, agriculture, education, and so on. There have been many reports and suggestions made on all the structural reforms India needs. This crisis is a great opportunity to dust off all those reports and start implementing the good ideas. A simple rule of thumb is that it must put limits on the government, and free the entrepreneurs. Voluntary exchange between individuals is what drives wealth creation and government officials have no business interfering in the process of wealth creation.

One critical reform needed is in the enforcement of contracts and the efficient resolution of disputes. If there is no respect for the rule of law, then investments will not happen. What India needs is 3-2-1 Justice – all pending cases must be cleared within 3 years, new cases must be resolved within 2 years, and appeals settled in 1 year. Only then will entrepreneurs have the confidence to do what they do best – solve problems and create wealth.

Taxes need to be reduced to ensure more money stays in the hands of people and corporations. India’s taxes are too high. They must be lowered such that no tax (income, corporation or GST) exceeds 10%. Among other benefits will be the reduction in the size of government, which will limit the damage that it can do.

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.

Finally, there is a need to have clear titles to all property in India. This will allow the poor to unlock the value of their property and also ensure that commerce can flourish without someone laying claim to a property based on some questionable document.

This is the plumbing India needs to put in place for Mission 10-20-30 to succeed.

Tomorrow: India’s Mission 10-20-30 (Part 10)

India’s Mission 10-20-30 (Part 8)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

India needs to borrow $2 trillion from global financial markets which are flush with funds. There is about $15-20 trillion earning zero or negative interest globally. All India needs to do is to guarantee a positive rate of return and give global investors the confidence that it will meet its obligations in the years and decades to come. The world needs India, and India needs the world.

The question then comes: how will India pay back the money it borrows? The two obvious answers are non-starters – printing money and increasing taxes. Both will have serious consequences and will push India further down the hole. As has been said, today’s fiscal deficits are tomorrow’s taxes. Besides, the borrowings are in dollars.

In effect, we are solving for our credit constraint by borrowing from the world. We are also releasing the credit constraint for the poor when we give them the money. By borrowing now, we can grow the economy, and the poor can grow their wealth. With the increased wealth, we can repay the loans.

What India needs to do is to monetise its surplus public assets – minerals, land and PSUs. This is the key that unlocks the process of wealth creation.

India’s surplus public wealth is estimated at $20 trillion. This comes to 15 lakh crore – 1,50,00,00,00,00,00,000. That is 15 followed by 14 zeros. This is wealth that belongs to the people of India – Rs 50+ lakh for every Indian family.

The repayment of the $2 trillion raised can be guaranteed by the $20 trillion of India’s surplus public wealth.

An example is the public wealth locked up in the 1000+ ‘palaces’ that are occupied by India’s ruling class (politicians and bureaucrats) in Lutyens’ Delhi. The market value of these British-era bungalows is about Rs 5 lakh crore, or about Rs 20,000 for every Indian family. Creating a Prime Minister’s Lutyens’ Delhi Liquidation Relief Yojana would be an excellent first step!

We have discussed jobs and money. What’s also needed is the plumbing that entrepreneurship and wealth creation needs. This is the plumbing that opens the tap of prosperity.

Tomorrow: India’s Mission 10-20-30 (Part 9)

India’s Mission 10-20-30 (Part 7)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

Mission 10-20-30 is the one big idea to make Indians free and rich. It envisions 10 crore new jobs in the next 20 months with a monthly income of Rs 30,000+.

The idea is centred around jobs because jobs are going to be our biggest challenge going around. A nation cannot survive on government handouts. Without jobs, there is no production. Without production, there are no incomes. Without incomes, there is no demand. Without demand, there is no production. Without production, there is no growth. The cycle of transformation begins with jobs.

There are two big ideas to get the job creation process underway:

  • Return $1 trillion of the people’s wealth to the people. This is the idea of “Dhan Vapasi”. It entails returning Rs 1 lakh to every Indian family (26+ crore) for the next three years. This is not Universal Basic Income – this is Universal Wealth Return. It is not funded by taxes, but my monetising public assets (which we will discuss shortly). Money in the hands of people will undo the demand shock that we are facing. When people spend on their needs, it creates a “demand pull”. This will kickstart the creation of new jobs across the value chain.
  • Invest $1 trillion in infrastructure and facilitate the creation of special economic zones. India needs hard infrastructure – roads, high-speed rail, airports, ports. It also needs the soft infrastructure to ensure rule of law – police, courts and judges, contract enforcement, property rights. All of this will create good jobs that will pay well. In addition, India needs to attract global manufacturing to shift to India. One way is to replicate what China did in the 1980s – create special economic zones with new rules. This is the time when we can replace 10 crore Chinese workers with Indian markers – and thus do to China what China did to the world in the 1980s and 1990s.

By focusing on jobs as the central theme, Mission 10-20-30 is what India needs to create its Deng moment.

The obvious question is where does India get this $2 trillion to launch Mission 10-20-30?

Tomorrow: India’s Mission 10-20-30 (Part 8)

India’s Mission 10-20-30 (Part 6)

I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.

The  key question to ask is: Why are some nations rich? Poverty is the default condition in the world. A few countries made the right policy choices to create prosperity for their people. When one studies these nations, we find that the common theme has been policies made on the basis of a set of “prosperity principles” which included some or all of:

  • Limited Government
  • Non-Discrimination
  • Economic Freedom
  • Decentralisation
  • Property Rights
  • Free Markets
  • Rule of Law
  • Free Trade

Contrast these with the choices we made in India over the past 75 years:

  • Limited Big Government
  • Non-Discrimination
  • Economic Freedom Command and Control
  • DeCentralisation
  • Property Rights Limited
  • Free Markets Price Manipulation
  • Rule of Law Delayed Justice
  • Free Trade Protectionism

It is not surprising that Indians have not become rich. The pandemic-caused Third World War will be made worse by government actions unless a very different path is chosen. In 1947, India achieved political freedom, but the new political masters continued with British Raj 2.0. Only the skin colour of the rulers changed. And therefore, the outcomes did not change.

What we need is a new path – Nayi Disha – that charts a new course guided by the prosperity principle I outlined previously. India needs to be set free from the clutches of the government (politicians and bureaucrats).

At times like these, we must remember Daniel Burhnam’s words: “Make no little plans. They have no magic to stir men’s blood…Make big plans; aim high in hope and work.”

This where Mission 10-20-30 comes in.

Tomorrow: India’s Mission 10-20-30 (Part 7)

India’s Mission 10-20-30 (Part 5)

I spoke on May 15 at The Nudge Foundation’s Charcha 2020 event in a panel on public wealth organised by the Centre for Civil Society. My talk was entitled “Mission 10-20-30: The Nayi Disha for Prosperity.” It built on the ideas I have outlined on the blog in the past month, and expanded on them.

I started by outlining the crisis we face and the importance of thinking differently:

  • We are in the midst of The Third World War. The pandemic started it, and actions by governments are going to worsen it. As happens in a war, we are going to see immense economic destruction and the poor are going to bear the brunt of it.
  • India has also been hugely impacted. We are seeing falling incomes, rising job losses and failing enterprises. Migrants who came to the cities in search of betterment of their lives have become internally displaced persons. As a poor nation, India faces immense humanitarian and economic crises.
  • At a time like this, it is good to keep in mind Milton Friedman’s quote: “Only a crisis-actual or perceived-produces real change. When the crisis occurs, the actions that are taken depend on the ideas that are lying around.” What we have to do is to bring forth new ideas that can perhaps persuade the policy-makers to make the right decisions.
  • India has a choice between two futures – one in which the government is everything, and the other in which we (the people) choose our own destiny. This is India’s Mao or Deng moment. Mao pushed the Chinese people down the road to serfdom and starved over 40 million of his fellow Chinese. Deng’s policies lifted hundreds of millions of Chinese out of poverty and set them on the path to prosperity. What will India do? Continue with policies which have resulted in “perpetually planned poverty” or change the rules so that we can achieve different outcomes?

Tomorrow: India’s Mission 10-20-30 (Part 6)